Part 2: Insolvency - The end of Social Security as we know it:
Bottom Line: I guess the good news is that unlike Medicare's looming insolvency, the timeline for Social Security's looming insolvency didn't negatively change. Here are the key points from the Social Security Administration's annual report.
Social Security general fund insolvency date is 2034
Disability is set to enter insolvency in 2023
Starting in 2034 the general fund would only be able to meet 77% of its obligations and the ability would continue to decline thereafter
The disability fund's insolvency would allow it to only meet 93% of obligations in the first year with further declines thereafter
Here were the changes from last year's report:
- General fund would only be able to meet 77% of it's obligations at the initial time of insolvency in 2034 (2% worse than last year)
- Disability is set to enter insolvency in 2028 (five years better than last year)
- Disability would payout 93% of it's obligations once entering insolvency - 5% better than last year
So here we are just 17 years away from the granddaddy of all Government programs reaching insolvency. It's not a question of if we'll have to make adjustments to the program, it's a matter of how painful we want this to be. Already the politicians took the irresponsible approach in band-aiding disabilities' insolvency. Disability was set to enter insolvency in 2016 until the Government diverted general fund money into the disability fund to delay it's entrance into insolvency at the longer term expense of the general fund.
Like Medicare, Social Security was created under a different time in which life expectancy was much lower. In the 1930's when Social Security was created, the average life expectancy wasn't quite 64. Today it's at 80 and counting. Clearly an age adjustment may be a prudent approach at some point. That being said the greater issue is that Social Security isn't a trust fund at all. It's a house of cards. Rather than the Social Security Administration actually having an account in your name with money that grows over time, the Government spends and borrows against all of it and simply pays obligations out of incoming tax collections. If it were a private entity it'd be classified as a ponzi. Instead, because the government is running it (into the ground), it's essentially legalized fraud. It's imperative that real reform creates an actual account in your name with money that's yours and can't be spent by the Government. More to come...