The article is titled: SOCIAL SECURITY’S FINANCIAL OUTLOOK: THE 2018 UPDATE IN PERSPECTIVE by Alicia H. Munnell** ( June, 2018)
A quote from the article: “Trust fund exhaustion is still 2034, after which payroll taxes still cover about three quarters of promised benefits.”
The good news…”The exhaustion of the trust fund does not mean that Social Security is “bankrupt.” Payroll tax revenues keep rolling in and can cover about 75 percent of currently legislated benefits over the remainder of the projection period…”
One of the lesser considered impacts of our nation’s dwindling Social Security resources is the decreasing fertility rate in America.
According to the research: “The fertility rate determines the age structure of the population, the ratio of workers to retirees, and hence the finances of the Social Security program, which operates largely on a pay-as-you-go basis.”
Further, “The National Center for Health Statistics recently reported that, in 2017, the birth rate had declined to a record low.”
Simply put, there are fewer people of working age who will be paying into the Social Security coffers.
In conclusion – “The 2018 Trustees Report confirms what has been evident for almost three decades – namely, Social Security is facing a long-term financing shortfall which equals 1.0 percent of GDP.”
There is a strong case for acting sooner rather than later to ‘fix’ the shortfall.
I have often written that - if you are decades from retirement, make a plan that assumes Social Security benefits may be significantly decreased as a part of your overall post-retirement income.
You can read the entire brief on the website… www.crr.bc.edu
* The mission of the Center for Retirement Research at Boston College is to produce first-class research and educational tools and forge a strong link between the academic community and decision-makers in the public and private sectors around an issue of critical importance to the nation’s future…
**Alicia H. Munnell is director of the Center for Retirement Research at Boston College and the Peter F. Drucker Professor of Management Sciences at Boston College’s Carroll School of Management
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