What was set up in the wake of the Great Depression to assist an aging population is about to run out of money. According to an Associated Press story published yesterday, the Social Security Trust Fund will run dry in 2033. That’s 21 years from now.
Medicare’s hospital insurance fund will be void of funds by 2024.
Social Security has been called by critics as the great Ponzi scheme of all time. It was established in the days of the Great Depression and the life expectancy was 65. Well, most workers never made it to collect a dime of what they had paid into the system. Perhaps that was the intention.
However, with advances in medicine and the life expectancy surging to 81.73 for women and 75.81 for men. That’s a far cry from 65.
Why is this great entitlement program in trouble today? Associated Press attributes the high cost of energy and suppressed wages and workers working few hours that projected prior to the recent great recession. In addition, the 2012 cost-of-living increase was greater than anticipated — 3.6 percent.
Social Security has two funds —one for retirement and survivor benefits and one for disability. The retirement fund could last until 2035, if Congress doesn’t pull funds from it to bolster the disability fund as it did in 1994.
What happens if the two funds dry up entirely? “If they run dry, payroll taxes would cover about 75 percent of benefits,” according to Associated Press.
Many baby boomers were anticipating a comfortable retirement with Social Security and their 401(k) plan. However, many investments in 401(k) plans were plundered by other Ponzi schemes and a sharp drop in the stock market, a bursting of the housing bubble and an overall collapse of the world economy.
Boomers have concluded that retirement is out of the question. However, that mind set places a premium on jobs for younger college graduates trying to find their place in the struggling economy.
Congress and the next administration will have to work to salvage Social Security and what’s left of Medicare after $500 billion is cut away from that program to fund Obamacare.
Right now, Social Security might be tagged as Social Insecurity.