28 Sep Is Social Security Broke?
More people than ever are making Social Security claims because of the poor economy. Social Security is currently running a surplus of $2.5 trillion dollars, but those numbers are based upon debt obligations and will fade fast in the future unless something is done to correct the system. Everyone knows that the Social Security system is broken, but many don’t understand why? The Social Security system is currently underfunded, and in the future, unless fixed, it will implode.
Now more than ever, the poor economy is cutting in on Social Security. More people than ever will be applying for early retirement this year and next year because they have either lost their job and cannot find another one or they are going to lose their jobs and will need to replace that income in some manner. Likewise, the trillions of equity lost in the stock market hit the older generation more than younger workers with less retirement savings in the game. As if this was not enough, the losses in the homeowner equity were felt by the older generation that had more equity in their homes. This pinch will put Social Security behind the eight ball for years and maybe even decades to come. The proposed deficits are $10 billion for 2010 and $9 billion for 2011.
Interestingly, the Federal Government touts a $2.5 trillion dollar surplus for Social Security, but in 2010 and 2011, the Government will have to add to the Federal Deficit because the $2.5 trillion isn’t really in the Federal coffers.
So, the problems begin when you see more early retirees and an aging population of baby boomers applying for benefits combined with an economic slump. Some 400,000 additional people applied for Social Security Benefits since last at this time. I expect that number to continue to rise. Which leads to the next logical question? When will Social Security go broke?
This question was answered in the past at around 2037. I’m sure these numbers will be changed going forward as the current 2037 number did not take into consideration further deficit spending going forward.
As always, I will keep watching, as my expected date of retirement keeps extending out as well.
This post was written by Carmen Dellutri, Esq.
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