MacIver News Service | April 8, 2011
The Social Security Administration is warning people born after 1970, they will only receive “78 cents for each dollar of scheduled benefits,” when they are eligible for full retirement in 2037.
That information was contained in the newsletter the Social Security Administration includes with individuals’ annual statements, which are mailed out every year.
2037 is the same year the Administration expects the social security program to become insolvent.
“Social Security is not sustainable over the long term at current benefit and tax rates,” according to the Administration’s website. “By 2037 the trust funds will be exhausted. At that point, payroll taxes and other income will flow into the fund but will be sufficient to pay only 78% of program costs.”
However Social Security will start its downward slide in just a couple of years.
“In each year after 2014, the program will pay more in benefits and expenses than it collects in taxes,” the website warns.
The concept of Social Security is you pay into the program, the government invests that money, and when you retire, the government pays back your investment in monthly payments.
In reality, the Social Security Administration says it “is largely a pay-as-you-go program. Most of the payroll taxes collected from today’s workers are used to pay benefits to today’s recipients.”
The Administration says the program will still be around when younger workers retire, however, it is unsustainable at its current level.
Currently there are 2.9 workers for each social security beneficiary. That will drop down to 2.1 workers for each beneficiary by 2041. The number of beneficiaries is expected jump from 41.6 million today to 79.1 million in 2041.
With longer life expectancies and lower birthrates, the administration says “the ratio of workers to beneficiaries is falling. Therefore, the taxes that are paid by workers will not be enough to pay the full benefit amounts scheduled.”
All of this information may be good to know, even if it went unnoticed in your mail box again this year.
But here’s some more bad news,: the Administration announced this month it will discontinue mailing these annual reports since they cost $70 million dollars a year to print and mail.