Social Security Will Be Paying Out More Than It Receives In Just Five Years

Tyler Durden's picture

Authored by Mac Slavo via SHTFplan.com,

When social security was first implemented in the 1930’s, America was a very different country. Especially in regards to demographics. The average life expectancy was roughly 18 years younger than it is now, and birth rates were a bit higher than they are now. By the 1950’s, the fertility rate was twice as high as it is in the 21st century.

In other words, for the first few decades, social security seemed very sustainable. Most people would only live long enough to benefit from it for a few years, and there was an abundance of young workers who could pay into the system.

Those days are long gone. As birth rates plummet and people live longer, (which otherwise should be considered a positive development) social security’s future is looking more and more bleak.

No matter how you slice it, it doesn’t seem possible to keep social security funded. In fact, social security is going to start paying out more money than it receives in just a few short years. It may even be insolvent before the baby boomer generation dies off.

According to the Social Security Board of Trustees, the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds will be depleted in 2034.

 

When this happens, only 77 percent of benefits will be payable. That estimate is no change from last year’s estimate.

 

In addition, the Disability Insurance trust fund will be depleted in 2028, which is an improvement from last year’s estimate of 2023. Once that fund is depleted, 93 percent of benefits will be paid.

 

Right now, Social Security continues to take in through revenue more than it pays it through benefits, which is expected to continue until 2022. Once Social Security begins to pay out more than it takes in, it will be forced to liquidate the assets held by the trust funds.

 

In 2016, Social Security generated $957 billion in income. It only paid out $922 billion including $911 billion in benefits to 61 million beneficiaries.

But the solutions that have been proposed for this problem don’t hold much promise. For instance, we know that simply raising taxes won’t work.

But increasing the payroll tax is not a good long-term solution to fixing Social Security. For example a higher payroll tax would have negative economic effects. In addition, it’s not even clear that raising the payroll tax would even generate enough revenue.

 

“Some claim that the solution to preserving Social Security is to raise more taxes, but history shows that doesn’t work,” said David Barnes who is the director of policy engagement for Generation Opportunity in a statement to the Washington Free Beacon. “In fact, since Social Security was created, payroll taxes have been raised more than 20 times. Twenty times! Yet, the program is still headed towards insolvency.”

This is one reason why so many Western countries, almost all of which are suffering from declining birth rates, have been so eager to open their borders to more immigrants. They’re trying to bring in as many young workers as they can.

But that’s not going to work either. Forget about the high crime rates, terrorist attacks, and social disintegration that Europe is facing now after bringing in millions of immigrants. Even if those problems didn’t exist, immigration isn’t the solution. The West has had wide open borders for decades, and it hasn’t made a dent in the liabilities faced by social security programs (perhaps these immigrants aren’t paying as many taxes as these governments had hoped).

We could let younger generations opt out of social security to stave off future obligations, but that wouldn’t help fund the current generation of retirees. Social security is already on the path to being underfunded for them, and letting young people opt out would obviously make things worst for current retirees.

There isn’t really any viable solution for paying off the future liabilities of social security, aside from cutting the benefits or increasing the retirement age. Otherwise it’s going to run out of money eventually, which is the same story with private and public pensions. We are all paying for our retirements in one form or another, but few of us living right now are going to fully benefit from it.

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bluez's picture

When I began working, they said they were saving up all that money they took out. I guess they thought I was some kind of a sucker.

tmosley's picture

Just raise the fucking retirement age already. Lock it to two or three years past the average life expectancy. Problem fixed.

Or better yet, offer some grand challenges for extending the human healthspan/reversing aging. If we could stop aging, the purpose behind about 90% of government spending would disappear in an instant.

Creepy_Azz_Crackaah's picture

Git yo AZZES work'n, snowflakes.  You have OLD PEOPLE to pay for.  And they vote.

Welcome to your government, kiddies...

 

Phase out SS, get the government back to its constitutional duties, and give me the 14%, plus, that has been forcibly taken from me by the gubmint then spent on vote buying schemes instead of "saving it" to give to me in my "retirement."

doctor10's picture

all they need to do is de-tax and de-regulate small business's -which traditionally provide the bulk of new jobs. Presto!!
No prob.

except ObamaCare has effed up the DC legislative process beyond repair. ObamaCare broke DC. We will never see another piece of constructive legislation from Washington. All that's left are executive orders-which are of limited scope and durability-nothing upon which to plan a business

pods's picture

Yep, and the more EOs that they issue in place of actual law, the worse it becomes.

They are poisoning the well.

pods

PT's picture

Who cares?  Just let the robots do all the work and bail out the oldies.  They had no trouble bailing out the banksters.  Why would bailing out the oldies be a problem?

And / Or

Given that the Ponzi can't pay out, perhaps it is time to stop paying in.  Why are people still forced to pay in if they know in advance that it can not pay out?

bad man's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do.. www.jobproplan.com

markovchainey's picture

Social Security "assets"!  Hahahahahahahahahahaha....

Oh fuck, I need another drink.

rccalhoun's picture

"eager to open the borders to bring in young workers to pay SS taxes"  ????

1. raise SS taxes on young immigrants to 90% and the plan might work 

Donald J. Trump's picture

JJust like Obamacare.  It's amazing that they don't even try to hide it anymore.

Hugh_Jorgan's picture

Won't happen. But don't worry, we have lots more time. The watershed moment in 2022 will not even phase the corruptocrats in DC. It will be full steam ahead until the coffer is beyond empty. Heck, many more roaches in Congress will be able to retire with "clean" hands before something actionable really happens.

MisterMousePotato's picture

"Faze," for God's sake. Did everyone on the internet acquire their vocabulary through television?!?

shovelhead's picture

I learned mine by playing Beatles records in reverse.

markovchainey's picture

If it wasn't on the box of Captain Crunch then I can't spell it.

dalefi36's picture

How do you know he is not referring to his Star Trek fazer/phazer? Found it spelled both ways as far as star trek memorabilia is concerned.

Mr 9x19's picture

it is called deny. if you hammer to population that all going in cannot go out, every one go full rebellion and the world as you know it in 72h hours  make walking deads looks  like barby with ken at ibiza party cartoon.

 

part of the population know it is collapsing, but almost all retired are in deny.
because the want their money back.

 

from the moment a whole generation will have no retirement because not a single dollar collected during labor years, guess what happen.

it is happening, now. it is a long process, you still have to wait like 35 years to be fully done process. it will crack down and explode before,

by seeing all the different signs, i have extreme difficulty to see any form of civilisation around the mid century. and we are facing challenges that will not  wait 10 years to be solved.

 

MalteseFalcon's picture

More absurd doomer porn. 


Let's be clear, America's elder community has no intention of  letting Wall St or the MIC dip into Social Security.  Any politician that steps up on this is finished.  Has Trump raised this issue? Nope.  See you in 2024.

No matter how you slice it, it doesn’t seem possible to keep social security funded. In fact, social security is going to start paying out more money than it receives in just a few short years.

The slicing has already been done.  This was the plan.

It may even be insolvent before the baby boomer generation dies off.

Social Security is almost entirely a pay-as-you-go scheme.  As such it can never go bankrupt, unlike defined benefit pensions or annuities.

According to the Social Security Board of Trustees, the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds will be depleted in 2034.

This was the plan.  BTW, much of the baby boomer generation will be gone by then.

When this happens, only 77 percent of benefits will be payable. That estimate is no change from last year’s estimate.

100% of the benefits will be paid.

 In addition, the Disability Insurance trust fund will be depleted in 2028, which is an improvement from last year’s estimate of 2023. Once that fund is depleted, 93 percent of benefits will be paid.

The disability fund was supposed to go bankrupt in 2016.  Anyone missing a check out there?  <crickets>

Right now, Social Security continues to take in through revenue more than it pays it through benefits, which is expected to continue until 2022. Once Social Security begins to pay out more than it takes in, it will be forced to liquidate the assets held by the trust funds.

This was the plan.  Nothing to see here.

In 2016, Social Security generated $957 billion in income. It only paid out $922 billion including $911 billion in benefits to 61 million beneficiaries.

This is a government plan that runs a surplus.  Name me another one.  But let's see how many people are on the system that never paid in and kick them off.

But the solutions that have been proposed for this problem don’t hold much promise. For instance, we know that simply raising taxes won’t work.

Raising taxes will absolutely solve the problem.  Just lifting the cap on taxable wages ends this whole tempest in a teapot.  Permanently.

But increasing the payroll tax is not a good long-term solution to fixing Social Security. For example a higher payroll tax would have negative economic effects. In addition, it’s not even clear that raising the payroll tax would even generate enough revenue.

"Negative economic effects".  LOL.  Where to start on that?

“Some claim that the solution to preserving Social Security is to raise more taxes, but history shows that doesn’t work,” said David Barnes who is the director of policy engagement for Generation Opportunity in a statement to the Washington Free Beacon. “In fact, since Social Security was created, payroll taxes have been raised more than 20 times. Twenty times! Yet, the program is still headed towards insolvency.”

Who is this fool?  It's a pay as you go plan and the number of recipients has been increasing.  After the Boomers leave, taxes will probably be lowered or more likely benefits will be raised,

This is one reason why so many Western countries, almost all of which are suffering from declining birth rates, have been so eager to open their borders to more immigrants. They’re trying to bring in as many young workers as they can.

They are not bringing in tax-paying workers.  They are importing compliant occupants.  Importing rug rats increases the strain on the welfare state.

We could let younger generations opt out of social security to stave off future obligations, but that wouldn’t help fund the current generation of retirees. Social security is already on the path to being underfunded for them, and letting young people opt out would obviously make things worst for current retirees.

There will be no opt out.  Social Security, with better benefits, will be available to the Millennials.

There isn’t really any viable solution for paying off the future liabilities of social security, aside from cutting the benefits or increasing the retirement age. Otherwise it’s going to run out of money eventually, which is the same story with private and public pensions. We are all paying for our retirements in one form or another, but few of us living right now are going to fully benefit from it.

This is a lie.

Priorities, people.

The health "system", illegal non-tax-paying immigrants, [outsourcing of businesses, jobs (and taxes)] and the MIC which returns nothing.  These are the low hanging fruit.

Hal n back's picture

it has been pay as you go since at least 1995.

there was a study by Harvard and Dartmouth 3 years ago saying that teh funds trusts would run dry in 6-7 years. One reason was life expectancies of soc sec and medicare were too short-by several years. Thats a tail thats going ot be felt.the way congress has dealt with this is to say there is no inflation an dthus keep cost of living low or zero.

So whats the root cause of problem?

Yeah it was all designed wrong.

You cannot have non working spouses get medicare without paying in or get 1/2 of workign spouses Soc Sec without paying in . You cannot have immigrants coming to tehUS and working only 10 years to qualify for both (the 40 quarters thing)

But you cannot have politicians tryign to get reelected from each election date as they wil lnto do th eright things.

Consequently the problems worsen

 

Simpson Bowles said it 0ver 7 years ago and Obama said no (raise taxes cut benefits) an dnow the problem is bigger as is the fix.

 

Actually Timmy Geithner said it 10 years ago in a trustees letter--need to do somethign "immediatly" he said--Congress did not budge its ass thenm , or now or in between

 

its the 3rd rail of politics- Soc Sec, Medicare, medicaid, Prescription Drugs and Obamacare.

 

Everybody will lose big when the country goes belly up and dollar crashes. The immigrants from Asia--the smart wealthy ones who came here, might have a place to return to.

 

Mst people come here to suck off the and-its not really a land of opportunity anymore-its a land of guaranteed lifestyle withiut having to work or produce or contribute.

Jack Kennedy would be a republican now--ask not what your country can do for you... they would never let him say that now.

 

 

 

 

Kayman's picture

"So whats the root cause of problem?"

Human nature.  Why solve a problem today, that you can put off until tomorrow. 

Implied Violins's picture

Personally I think the elites already have a solution. It just doesn't involve you, or me...or 95% of humanity.

gatorengineer's picture

Fixable in 5 minutes.  Let the tax go all the way up and include bennies an perks.  Let buffet do his part

MalteseFalcon's picture

It has been pay as you go since at least 1995.

It stopped being completely pay as you go in 1983 when a committee headed by Alan Greenspan created the trust fund.

there was a study by Harvard and Dartmouth 3 years ago saying that teh funds trusts would run dry in 6-7 years. One reason was life expectancies of soc sec and medicare were too short-by several years. Thats a tail thats going ot be felt.the way congress has dealt with this is to say there is no inflation an dthus keep cost of living low or zero.

You need to separate SSI from Medicare.  This is about SSI.  Congress has held the inflation adjustment too low (1%).  At the same time the inflation adjustment on the wage cap is 7%.  Just some fun with numbers.

Simpson Bowles said it 0ver 7 years ago and Obama said no (raise taxes cut benefits) an dnow the problem is bigger as is the fix.

Every day I pray that Alan Simpson will stop collecting his government pension and health benefits.

Actually Timmy Geithner said it 10 years ago in a trustees letter--need to do somethign "immediatly"

Geithner wanted to privatize SSI just before the market crash.  LOL.  Wall street hates SSI.

its the 3rd rail of politics- Soc Sec, Medicare, medicaid, Prescription Drugs and Obamacare.

In the middle of the "crisis" Bush II implements Medicare schedule D.  Go figure.

Everybody will lose big when the country goes belly up and dollar crashes.

Good news if that happens.  SSI will be the least of your worries then.
 
Mst people come here to suck off the [government tit] withiut having to work or produce or contribute.

Most SSI recipients worked and contributed their whole lives. 

Jack Kennedy would be a republican now--ask not what your country can do for you... they would never let him say that now.

JFK didn't die in vain.  He died in Dallas, TX.

Michigander's picture

Its not pay as you go. It has never EVER been pay as you go.

Miss Fuller, a Legal Secretary, retired in November 1939. She started collecting benefits in January 1940 at age 65 and lived to be 100 years old, dying in 1975. Ida May Fuller worked for three years under the Social Security program.

MalteseFalcon's picture

You do not understand the definition of "pay-as-you-go".

The baby boom generation has paid in from their first paycheck.

As for Ida May Fuller, I understand that she was buried with some gold teeth.

You could dig Ida up, extract the gold and get some payback.

It's only fair.

Anon2017's picture

Ida May never contibuted to Medicare but received 10 years of benefits. We have a winner here in the Ponzi game. 

MalteseFalcon's picture

Maybe we could get even by selling her descendants into slavery.

Somebody's got to be slavin' somewhere.

shovelhead's picture

"Well Mr. President, You can't say Dallas doesn't love you."

BeanusCountus's picture

My understanding is that disbursements actually exceeded receipts in around 2010 by small amounts.  Not sure if that included disability or not.  Running close to break even these days but slowly changing to deficit.  Just keep in mind this quote from Clinton's people a while ago about the supposed "trust fund":

“These balances are available to finance future benefit payments and other trust fund expenditures–but only in a bookkeeping sense. … They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury, that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

It's not 2030 something when annual budget deficits start getting hit.  It's probably happening to a small degree even now.  Impact on annual deficit will begin to grow in the years to come.

Jack&#039;s Raging Bile Duct's picture

The other thing that people never seem to mention, is that SS cannot keep up with inflation. Even if the system were more robustly designed, it would still only hemhorrage at a slower rate. Nothing can match the compounding currency debasement over the decades.

vato poco's picture

"the root cause of the problem? it was all designed wrong"

LOL. ya think??

saltine's picture

I'm 64. Work 6 days a week and have done so for decades. Set up Subchapter S corp in 1990 to minimize FICA and Medicare tax payments. I'm eligible for full retirement benefits at age 66 which in my case would be $2,400/month.  If I had started benefits at age 62 the monthly benefit would have been $1,845. Waiting as long as possible to receive benefits results in an 8% increase in benefits per year ($3,143 per month at age 70). 

To date the taxes I have paid into SS plus those paid by my employers total $204K.

My understanding is that if I live to age of 90 (as long as my parents) I'll receive in the vicinity of $800K in benefits ($691K plus cola increases). This does not include disability or survivor benefits.

The annual statement I receive from SS has included a notice for years that says by 2034 payroll taxes collected will only be enough to pay 79% of scheduled benefits.

It's an f'n stupid system and will fail. Why will some 30-something want to continue to pay taxes that will go as benefits to some old cracker like me? Eventually the voting demographics will change and subsequently so will the SS system.

All that said, I was forced into SS. And I would like to get out of it what I was promised when forced into it. The $204K paid into SS could have earned at least as much if invested elsewhere. 

 

 

MalteseFalcon's picture

To date the taxes I have paid into SS plus those paid by my employers total $204K.

My understanding is that if I live to age of 90 (as long as my parents) I'll receive in the vicinity of $800K in benefits ($691K plus cola increases). This does not include disability or survivor benefits.

That's the rub.  You could die tomorrow and your children would be left to moan that you paid $204 for nothing.

The annual statement I receive from SS has included a notice for years that says by 2034 payroll taxes collected will only be enough to pay 79% of scheduled benefits.

The taxes will be increased.  No politician is going to show up with a 21% off message.

It's an f'n stupid system and will fail.

No it isn't and no it won't.

Why will some 30-something want to continue to pay taxes that will go as benefits to some old cracker like me?

If for no other reason other than old crackers and their friend "the state" will insist.  And they will not receive SSI which will be available to them.

Eventually the voting demographics will change and subsequently so will the SS system.

The elderly population in this country is growing and the elderly vote their issues like nobody's business.  Any attempt to radically reduce the SSI system will be met with political chaos.  It isn't happening.

All that said, I was forced into SS. And I would like to get out of it what I was promised when forced into it. The $204K paid into SS could have earned at least as much if invested elsewhere.

The last 30 years has been a FED asset bubble.  Put all the rest of your savings into the stock market now and let's talk in a couple of years.  As for forced, I and my friends got an "invitation" to the "Viet Nam lottery".  Ain't life a bitch.

H. Perowne's picture

"As for forced, I and my friends got an "invitation" to the "Viet Nam lottery".  Ain't life a bitch."

What a shame you didn't get to re-enact Christopher Walken's scenes from The Deer Hunter. Especially the last one. But hey, you've still got time.

MalteseFalcon's picture

Dude, as long as there's a chance I might collect more SSI than I paid in, I'm staying in the game.

I'd thank you for paying in, but your just doing your job.

H. Perowne's picture

No thanks needed, I'll even throw in a free helicopter ride for you as well.

Mr 9x19's picture

i dont see the point of going full zombie to work until 70+ if after all this labor life, the money your receive cannot be spent for your pleasure but to maintain you alive.

 

the concept of the live and the pleasure of being alive, free, happy, have been totally wiped from global conscious.

 

it is scary

QQQBall's picture

OK genius. you could have collected $1,845 for 50 months by retiring early = $92,250. Instead, you will get a start at $2,400 so the $655 spread requires 141 months to equal what you didnt take. you will be 78 when you break even, if allah wills it. I realize there is some squishy offsets by COLAs, but you get the idea.

 

its just math

dalefi36's picture

Finally convinced my mom to do the math last year. Retire asap, take what you can get.

 

ElTerco's picture

They will push out the retirement age another three years. They might even raise the minimum age from 62 to 65, or simply lower the benefit amount for those who begin drawing at age 62 by about 23%.

MalteseFalcon's picture

They might.  Currently there is no movement in that direction.  It would cost some political careers, so it may be a while.

fuzh007's picture

damn M F watch the george carlin video, they don't give a fuck about you and they are coming after your ss and they will fuckin get it!!!

MalteseFalcon's picture

Great video. 

I've watched it a dozen times. 

George is right.

They want all of the retirement funds.

But I'm not rolling over.

And neither should you.

Tarjan's picture

Would like to know how much SS would have earned if they had put the surplus into Treasuries instead of siphoning it into the general operating fund.

 ~ 

 

MalteseFalcon's picture

The "fund" gets credited with interest.  No much.  Just what are treasuries paying right now?

malek's picture

You have so completely and "convincingly" refuted any critic of Social Security here...

Now you only have to tell us -if SS is such an invincible scheme- why we SHOULDN'T make everything work just like it!

MalteseFalcon's picture

If you mean every government program should be financed by earmarked taxes, run a surplus and directly benefit only those who contributed, I'd say that sounds pretty good to me.

Even if you have other retirement assets, SSI offers a solid portfolio contribution.

Protection against the asset crash that many suspect is coming, for example.

malek's picture

"run a surplus"

How come you don't mention what the government did with those surpluses?

dalefi36's picture

What did they do with the surplus? My understanding is they spent the money and issued IOU's, but as long as the IOU's are paid, does it matter what is done with the surplus?

My understanding of the whole "insolvency" problem is a matter of whether or not the IOU's will be repaid.

And, even if they were not, raising removing the ceiling on payroll taxes solves the problem forever.

I would expect people coming to a site, supposedly dedicated to financial things in general would understand basic math.

dalefi36's picture

raising was supposed to be struck out