If you’re hoping to tap into social security for your retirement, there’s some bad news. Money is quickly running out. In 2020, the money paid out to social security will exceed what it brings in. That means we’re about to start tapping into reserve funds. This is the first time this has happened since 1982.
Of course, the reserves aren’t slated to last forever, either. By 2035, the reserves will be gone. It’s expected that 100% of benefits can be paid out during that time. But afterward, only 80% of social security benefits will be paid out. That means lawmakers are being pushed to fix this problem. The country only continues to grow, putting additional strain on the system.
“Both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing,” said the board of trustees, begging for help from the politicians in Washington. This is a dire warning that something needs to be done sooner rather than later.
Will Social Security Run Out?
By 2035, Social Security will have no choice but to lower its output. Even though people are paying into it, that can only be sustained for so long. By 2035, as stated, the program will be at 80% capacity. There will be no more reserve funds to cover the additional amounts needed to keep payments at 100%.
By 2052, the complete system is due to run out of money. But that doesn’t mean other parts of the program won’t run dry before then. For example, Medicare’s hospital trust fund probably won’t exist after the next seven years. There are various programs that make up the difference finances of the Social Security program. Many of those programs will run out of money between now and then.
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Costs are expected to rise as well. The annual cost of Social Security is slated to rise to 5.9% of the GDP by 2039. Total costs of Medicare will rise also from 3.7% to 5.9%. Currently, 68.3 million Americans are on Social Security. In the next few decades, many more are slated to be on the program.
As Americans live longer than ever, people stay on the programs longer than they used to. That’s why Social Security is running out of money. Since people are living longer, they’re using more than they paid into it. Time will only tell whether the government will step in and fix this problem before it runs out completely.
