Is Social Security Doomed? You must know someone who is in the Social Security program.
Whether it’s your parents or relatives, a friend, or acquaintance, Social Security seems to affect everyone.
But as you probably know, the Social Security trust fund is running out of money.
The kitty could run dry as soon as 2035.
This is the elephant in the room, and it seems no one, especially policy makers, wants to discuss it for fear of scaring voters who want a “hands off” mentality at all times.
Changes to the System Would Create Mass Hysteria
Any changes to Social Security payroll taxes, the level of benefits, or the retirement age would probably send protesters to the streets. France changed their pension system and it provoked mass protests in 2023.
However, something must be done in the United States. This is the largest spending program in the country, but it is headed for disaster. Everyone pretends this won’t happen and figures the government will print money to shore up the system.
Don’t Cut the Amount of Those Checks
To keep the trust fund solvent, benefits would have to be reduced on average by around 17 percent. There is no way retirees will go through the pain of a smaller monthly check.
For many senior citizens, Social Security is their only source of income. Purchasing power would go down to a level that is unsustainable.
People would have trouble paying their rent and mortgages. There could be some that could become homeless. With inflation being what it is, there may not be cost of living adjustments that recipients get each year.
I have a military pension, and if my stipend were reduced by 17 percent, I would be hopping mad. That would be a bitter pill to swallow.
Massive Amounts of People Joining Social Security Every Day
Another problem is demographics.
As the United States undergoes a “graying” of society, there are not enough workers paying into the system to support all the retirees. More Baby Boomers retire each day making Social Security burst at the seams.
“In 2010, there were 43 million people aged 65 and older; by 2024 that amount had increased to 59 million people. At the same time, the number of workers contributing to the program has declined — from 2.9 covered workers per beneficiary in 2010 to 2.7 in 2024,” according to the Peter G. Peterson Foundation.
Social Security Is Not Just About Retirement
To understand the intricacies of the system, it is important to learn about the two levels of the program.
Most people are familiar with the first facet. This is called the Old-Age and Survivors Insurance (OASI) Trust Fund. This supports retirees with that all important monthly payment. Then there is a lesser known aspect. This is known as the Disability Insurance (DI) Trust Fund. This fund is for people who have some sort of medical condition that doesn’t allow them to work. When referring to both pots of money, experts use the term OASDI Trust Fund.
The OASDI Trust Fund has a funding gap. In 2024, there was what it known by economists as the “actuarial deficit.” That’s the average level of income that could make the OASDI Trust Fund sound over the next 75 years. The deficit is now 3.5 percent of the taxable payroll – up from 1.9 percent in 2010. That’s an 84 percent increase in the actuarial shortfall.
How to Save Social Security?
These are problems that must be rectified to save Social Security. But one “arrow” shot by the government for reform will not be sufficient. It will require a combination of reforms. If the feds would have raised the payroll tax rate in 2012, that would have only eased the funding gap by 43 percent. If the system reduced benefits for high-income individuals starting in 2012, then only 25 percent of the OASDI Trust Fund would be fully funded. Raising the retirement age in 2012 would have only replenished the trust fund with 38 percent of the deficit.
You can see that reform would be immensely difficult, and it should have been done 13 years ago. The government would have to raise the retirement age, cut benefits, and increase payroll taxes to save the program.
Feeding the Beast With Regular Allocations from Annual Budgets
The only other option is to have the federal government make the trust fund a target for budget appropriation.
That would mean it could create a separate budget line item for funding. Then the feds would allocate money each year to fill the doughnut hole. It is unclear how much this would cost, and with budget deficits and national debt at its breaking point, the federal government may not be able to provide this lifeline for the next several decades.
I recommend increasing the retirement age for people under 30, reducing their benefits, and raising payroll taxes on Generation Z. Yes, that seems unfair, but there are few other ways to save the system. Also, Social Security should be means-tested for high-income earners with independent savings of over a million dollars in their 401(k)s and IRAs.
The Real Social Security Problem
The problem with Social Security changes is that everyone pays into the program at some point, and people feel that it is only fair that they receive some amount of a payout after retiring.
Social Security does not have to be doomed. There needs to be better understanding of the dangers to the system. Without reform, we are headed to fall off a financial cliff. It will take strong political leadership to save it, but some of the best minds in government can achieve the changes to enable those monthly checks to hit bank accounts still.
It was never intended to be the sole source of income in retirement. Still, for many people, it is the only lifeline in old age, so something must be changed to maintain solvency to keep seniors from entering into monetary disaster.
About the Author: Dr. Brent M. Eastwood
Brent M. Eastwood, PhD is the author of Don’t Turn Your Back On the World: a Conservative Foreign Policy and Humans, Machines, and Data: Future Trends in Warfare plus two other books. Brent was the founder and CEO of a tech firm that predicted world events using artificial intelligence. He served as a legislative fellow for U.S. Senator Tim Scott and advised the senator on defense and foreign policy issues. He has taught at American University, George Washington University, and George Mason University. Brent is a former U.S. Army Infantry officer. He can be followed on X @BMEastwood.
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