Social Security Trust Fund: Income vs. Expenses

You may have read recently that the Social Security Trust Fund is starting to shrink, and that it is projected to run out of money in 16 years. (Medicare’s trust fund is projected to run out in 8.) This is not the same thing as Social Security itself running out of money, as most Social Security payments to retirees come from the payroll taxes paid by current workers. As the NY Times points out:

…tax collections would be sufficient to pay about three-fourths of promised Social Security benefits for 75 years.

Of course, a 25% cut is still going to be extremely painful for a lot of people. However, I don’t expect any changes soon. As the WSJ Daily Shot points out, Social Security has had a cash deficit each year since 2009. (More was being paid out in benefits than was taken in by payroll taxes.) The deficit was simply masked by interest earned on the fund until recently:

“Fixing” this problem is going to hurt somebody in the pocketbook – either younger workers or retirees, probably both. That means no politician is going to do anything about it unless there is no other option. The following chart of income vs. expenses suggests that about 2030, the trust fund will be nearly depleted and the rate of depletion will be quite fast.

So that’s my prediction. All talk and no action until 2030.

<!–

–>

Social Security Trust Fund: Income vs. Expenses from My Money Blog.

---

© MyMoneyBlog.com, 2018.

Read More: Social Security Trust Fund: Income vs. Expenses