The Social Security trust fund is expected to run out of cash in eight years, according to a report released Wednesday by the program’s trustees. Unless Congress acts before then, benefits for more than 60 million retirees and family members will automatically be cut by 23%.
The deadline is about nine months earlier than trustees were predicting a year ago. The change was primarily caused by a new law that increased benefits for nearly 3 million former public-sector workers who had pensions for jobs not covered by Social Security. Trustees also lowered their assumptions about future wages (and resulting payroll taxes) and birth rates.
More Americans have started drawing Social Security benefits at a younger age, partly out of fear that benefits could be lower in the future.
The popular program’s most basic challenge is demographic. The population of the United States is aging, with more than 11,000 baby boomers reaching retirement age daily.
For each person drawing Social Security, there are now fewer young workers paying taxes to support the system. The trust fund, built up over decades when baby boomers were working, provides a backstop for now. But once that money is gone, incoming payroll taxes will cover just 77% of promised retirement benefits.
Click here to read the rest of the article written by Scott Horsley over at NPR
