The Congressional Budget Office is forecasting that the Social Security system will pay out in benefits more than it takes in this year, and the chief actuary of the Social Security Administration seemingly agrees. The threshold will be crossed much earlier than expected because the current economic recession caused receipts from payroll taxes to decline — due to the high unemployment in the country — while the payouts have increased due to some people taking retirement earlier than was planned. The imbalance is a matter of some immediate concern, although the chief actuary states that the system has a considerable balance.
The demographics of the Social Security system are inexorable, however. The reality is that Americans are living longer and longer and therefore are receiving Social Security payments for longer periods than before. In addition, the forthcoming retirements of millions of Baby Boomers — who all at once will stop contributing and starting receiving — will place an enormous strain on the system. As a result of these factors, we will have fewer and fewer workers supporting payments to more and more retirees.
For those of us who are at the tail end of the Baby Boom, or younger, news about the solvency of the Social Security system is of the keenest interest. We’ve faithfully paid into the system for decades, and lately we’ve come to wonder whether we will ever see benefits from those contributions when our retirement date arrives. We pray that Social Security will be a reliable part of our retirement income planning — and when we read that the system is paying out more than it takes in already, years earlier than was anticipated, it is like a cold, icy hand clutching the heart.