On a drive back from Cleveland Monday, I heard some comments about longevity and its impact on Social Security. Dr. Thad Polk explained that the dramatic increase in life expectancy is mainly due to the tremendous improvement in infant mortality since Social Security was enacted in 1935. Studies have shown that the aging process has not changed all that much over the last 80 years. In other words, once a person survives to adulthood, say age 35, the probability that they would live into their 80’s or beyond was not much different after World War II than it is today!
So, what is the impact of this on our Social Security system? To help answer this question please click this link to one of the 9 articles about Social Security under the education tab on our website: Social Security: The Elephant in the Room. It has been said that the major impetus for Social Security, in a newly industrialized nation, was that during The Great Depression people no longer had the safety net of a subsistence farm.
Next, let’s look at the often asked question of when to start by clicking on this link: When Should You Take Social Security? As noted in the article, there are many factors to consider, not the least is – does one intend to continue to work? For a discussion of that, please click on the following link: How Will Working Affect Social Security Benefits? Social Security is complicated and the rules will no doubt change before many of you reach the point of making decisions about it for yourselves.
So, back to our original question – is Social Security bankrupt? My answer is no, it is not bankrupt. The 2016 Annual Report of the Board of Trustees states that the Old Age and Disability program will face a shortfall in 2034, a projection that is unchanged from the 2015 report. Even if the trust fund becomes depleted (which assumes Congress does nothing to shore it up), annual revenues from the payroll tax and taxation of Social Security benefits will be enough to fund 74% of scheduled benefits through 2090. And, there are plenty of adjustments Congress can make to shore it up.
Medicare? Well, that is another matter but we will save that discussion for another day/post.
Until next time, cheers!