SSA Confirms Date of Trust Fund Depletion

2033 marks the depletion of Social Security's trust fund - alien benefits will get cut 21%

Ric Edelman: It's Wednesday, May 8th. On today's show, the new report from the Social Security Administration. Every year for the last 84 years, the Social Security Administration's trustees issue an annual report on the health of the Social Security Administration. Well, the trust fund is in dire straits. This isn't news. The Social Security Administration trustees have been warning us about this for over a decade. And it has become really rather dire. The new report pretty much says what all the prior reports of the last decade have been saying. In 2033, the new report has just confirmed, yet again, the Social Security Trust Fund will be depleted. 

Now, you've heard me talking about this for about as long as the Social Security Administration has been giving us these warnings. These warnings have been falling on deaf ears, and unfortunately, Congress hasn't been paying any attention, but now we're hopeful that they will start to do so because 2033 is getting closer all the time. 

As of 2023, as I said, that social security trust fund gets depleted. Why is that a big deal? Well, in case you've been living under a rock or another way saying you haven't been listening to this podcast for very long, and if you haven't, by the way, welcome. Here's what it comes down to. When you earn money, you pay Social Security taxes. Those monies go into the Social Security Administration. They take your money, and they redistribute it to retirees. The people who used to be paying into the Social Security system and who are now retired and entitled to Social Security retirement benefits. So you as a worker put money in, people who used to be workers and who are now retirees take the money out. 

Now in a perfect world, the amount of money that goes in equals the amount of money that comes out. But, of course, life isn't ideal, and we have an imbalance. We have more people taking money out than we have putting money in. As a result of this imbalance, the system is a little bit weird.  

Now, in the old days, meaning if we go back 50 years or so, it was the opposite. We had more people putting money in than the system needed to pay out. With the excess cash. The Social Security Administration stashed that money away into a side pocket called a trust fund. And there the money sat for decades. But when the demographics shifted in our country, and we suddenly discovered that we had too few people putting money in relative to too many people taking money out, well, where did the social security system turn to make up the shortfall? The trust fund. In other words, we take all the money collected in social security payroll taxes, pay it out to retirees, and if we still owe those retirees even more money, we dip into the trust fund to make up the difference. We've been doing that to such a degree that by 2033, the trust fund will be depleted. 

At that point, according to the new 2024 report just issued a couple of days ago, Social Security will only be able to pay out benefits equal to 79% of current benefits. Now that's actually a bit of an improvement over what they said a year ago. A year ago, they said they would only be able to pay 76% of benefits. 

Now they're saying they'll be able to pay 79% of benefits. Wahoo. Bottom line is this. If you're a retiree and you're receiving a social security check, your check in 2033 is projected to be 21% less than today's check. That's a big deal. This is why we're talking about it. And this is why I'm hopeful that Congress begins to pay attention to this and starts to deal with it. And there is a slight piece of good news for the very first time, there is an effort on capitol hill to in fact deal with it the Republican Study Committee which is a group of pretty much every member of the House of Representatives, who's a Republican, about 80% of them are in this study committee, have put forth a series of recommendations to fix this problem. It's the first time we have seen either party issue such a set of recommendations. Now not everybody's going to agree with all of the suggestions being made, but that's not the point. The point is, Republicans are starting the dialogue. And even more to the point. They're doing so in an election year. That's great news.  

I'm hopeful that we will get a big dialogue going, even let it be a question or two in the presidential debates, hoping we actually have one or two of those, so that we can get everybody everywhere talking about this, because until we start talking about it, we have no hope of ever fixing it. 2033, the trust fund is depleted. Incomes from social security will drop 21% according to the social security administration if Congress doesn't act. You can read the report for yourself, just go to ssa.gov. It's a sobering read. 

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On tomorrow’s show, not just the social security administration, but now Larry Fink says we're facing a retirement crisis. 

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SSA.gov: https://www.ssa.gov/  

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