Social Security: The Clock is Ticking

The Social Security trust fund is in trouble. In just eight years, it will run out of money. This means that over 60 million retirees and their families could see their benefits drop by 23%. This is not new news, but the deadline has moved up. Last year, experts thought there was more time. What changed? A new law gave a boost to benefits for nearly 3 million former public-sector workers. Plus, there are fewer babies being born, and wages are not growing as fast as expected. The big issue is the aging population. Every day, more than 11, 000 baby boomers hit retirement age. This means fewer young workers are paying into the system to support the growing number of retirees. The trust fund has been a safety net, but once it's gone, payroll taxes will only cover 77% of promised benefits. There is a separate trust fund for disability payments, and that one is good until 2099. If Congress combines the two funds, the money would last until 2034. After that, benefits would drop by 19%. So, what can be done? Congress has a few options: raise taxes, cut benefits, or do a mix of both. The sooner they act, the more choices they have and the more time people have to prepare. Some experts are not happy with the delay. They say lawmakers have already waited too long. The president has promised not to cut benefits, but if nothing changes, the law says benefits will be cut automatically once the trust fund is empty. Some people think taxing higher income earners more could help. Right now, top earners don't pay Social Security taxes on income above $176, 100 a year. Taxing more of their income could keep benefits full through the end of the century. Meanwhile, the Social Security Administration is cutting staff, which means longer wait times and fewer in-person appointments. Some people argue that these cuts don't help the long-term financial problems. They just make it harder for people to get the help they need. There is also a Medicare trust fund that helps with hospital insurance, and that is set to run out in eight years, too. Medical costs are rising, and once the fund is gone, Medicare will only cover 89% of promised benefits.