A new study puts Social Security’s funding gap at $30 trillion dollars over the next 75 years. Meanwhile, the program has been paying out more than it’s been taking in since 2010. The Washington Post reports:
The projected shortfall in 2033 is $623 billion, according to the trustees’ latest report. It reaches $1 trillion in 2045 and nearly $7 trillion in 2086, the end of a 75-year period used by Social Security’s number crunchers because it covers the retirement years of just about everyone working today.Add up 75 years’ worth of shortfalls and you get an astonishing figure: $134 trillion. Adjusted for inflation, that’s $30.5 trillion in 2012 dollars, or eight times the size of this year’s entire federal budget.
According to the Post, covering this shortfall would require an $8.6 trillion investment today with 2.9 percent returns above inflation—for the next 75 years.There are well-documented reasons for this shortfall. The program is now supporting people for an average 25 years of old age rather than five, as it did originally. And while in 1960 there were 4.9 workers paying Social Security taxes for each beneficiary, that number has dropped to 2.8 today and is expected to drop to 1.9 in 2035.If Social Security is to survive in some form without bankrupting the government or diverting needed funds from other priorities, it needs to be drastically reformed. There has been bipartisan consensus that the program needs better means-testing and a higher age of eligibility to reflect Americans’ longer lifespans.Thus far, this hasn’t become a major issue in Washington or on the campaign trail. Hopefully this will change soon, particularly with Paul Ryan, as the vice presidential nominee, putting entitlement reform in the spotlight.The longer we wait, the more expensive these changes will become.