For years, we have all been hearing the predictions that the Social Security fund will have a difficult time paying full benefits by about 2033. But now researchers from Dartmouth and Harvard have suggested that the actual day of reckoning could arrive sooner than expected. These researchers believe that the actuaries for the Social Security Administration have been underestimating the program’s demographic challenges since about 2000. With election season rapidly approaching, we can all expect to hear a lot more about the problems faced by Social Security.
By now, you probably know that longer life spans and lower birth rates mean that in the future, there won’t be enough workers to support the Social Security system. Just consider this timeline of statistics:
- In 1955, there were 8.6 workers to every Social Security beneficiary
- In 1965, there were 4 workers to every Social Security beneficiary
- In 1975, there were 3.2 workers to every Social Security beneficiary
- Currently there are 2.8 workers to every Social Security beneficiary
- By 2035, there will be 2.1 workers to every Social Security beneficiary
Keep in mind that the Social Security fund does not work like a retirement fund, in which you deposit money into your own account, to be accessed later when you retire. Taxes paid into the system today support beneficiaries drawing upon the system today. So you can imagine the difficulty we will all face when we have only about two workers paying into the system for each person receiving benefits.
We have long been told that the program will only be able to pay 77 percent of currently scheduled benefits by 2033. However, the Dartmouth and Harvard researchers suggest that the Administration has not accurately accounted for current life spans, and that we can expect to confront the shortage sooner than 2033.
As election season approaches, candidates will likely appeal to public opinion on the Social Security deficit. It’s time to fix the problems within the system, whether we raise taxes, change the age at which we can file for benefits, reduce the cost-of-living adjustment, or adopt some other provisions. Now is the time to educate yourself on the future of Social Security, so that you can speak your mind at the polls.