ATLANTA — ATLANTA – A government report is hardly instilling confidence when it comes to our nation’s Social Security system, leaving many to wonder why the system’s trust fund is in danger of running dry.
The 2019 annual report from the trustees of Social Security and Medicare state that the programs “face long-term financing shortfalls under currently scheduled benefits and financing.” The trustees project that “the combined trust funds will be depleted in 2035” unless Congress makes changes.
If the trust fund runs dry, retirees will see their benefits slashed.
“Reports show that both programs remain strong, but there are long-term challenges,” says Jo Ann Jenkins, CEO of AARP.
People are living longer. When the Social Security system was created in 1935, the average life expectancy was 61. Now it’s almost 80.
While many start collecting early, more and more retirees are waiting. Retirees can receive full benefits if they start collecting at age 66, and those who wait until age 70 can receive added benefits.
“People are retiring later, and people living longer, so they’re getting full benefits for a longer period of time,” says Tom Smith, business professor at Emory’s Goizueta Business School.
The U.S. birthrate is at a 30-year low. That’s fewer people entering the work force to pay into the system.
Smith says while administrators have tweaked the system over the years, bigger changes are needed.
Options include increasing the age to receive maximum benefits. Incomes above $132-thousand are not taxed by the Social Security Administration. Another option is to raise the current cap to in order raise income for Social Security.
“All those things would push out how viable the program is, but they’re certainly not popular,” says Smith.
Financial advisors say too many retirees are depending on Social Security as their sole source of income.
A recent survey revealed that 2/3 of future retirees fear the Social Security system will run out of money in their lifetime.