It's Official: Social Security System Now in the Red

It was only a matter of time, but it's finally happened: The nation's Social Security system will pay out more than it takes in this year and next, as aging baby boomers begin entering retirement. The milestone marks the first time in nearly 30 years that the system is in the red, according to a report issued Thursday by federal officials overseeing the program.

The shortfall has been exacerbated by the recession and high employment, which have reduced payroll tax revenues. Long term, however, Social Security's finances stand to improve slightly, the trustees report said. A new tax on pricey health plans, part of recently passed health-care overhaul legislation that goes into effect in 2019, will result in more revenues.

Still, the plan's trust fund will be exhausted by 2037, the report said -- the same prediction it made last year. Treasury Secretary Timothy Geithner, a trustee, urged lawmakers to move quickly to resolve the problem. "Despite the projection that Social Security can continue to pay full benefits for nearly 30 years, the sooner action is taken, the more options for reform will be available, and the fairer reforms will be to our children and grandchildren," Geithner said in a statement.

Pay outs from Social Security last exceeded income from payroll taxes in 1983, after more than a decade of a running in the red, CNNMoney.com reports. In 1977, President Jimmy Carter signed legislation increasing the withholding rate from 2% to 6.15% -- about where it is today.

Social Security paid $675 billion in benefits to some 53 million beneficiaries last year, the reported noted.

The trustees report also showed the new health-care law, much of which begins taking effect in 2014, should boost the fiscal standing of Medicare, the federal health plan for seniors. The program will remain financially solvent for 12 years longer than projected a year ago -- until 2029 -- because of cost-cutting measures included in the health overhaul bill, signed into law last March by President Obama.

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momsswtvalentine

there is obviously a lack of knoweledge here, first the SS trustfund includes any debt owed by the Government to the fund. Second SSI "is not" part of the social security trust, it is only processed through the Social Security Dept. We can blame politicians all we want, but it will not change the fact that the system was designed for most payers to "NEVER DRAW BENEFITS". If the average life span when started was 59, and the age to draw was 65, that means that most people were "DEAD" 6 years before they were eligible for benefits. Today the majority of people draw benefits for 15 0r 20 years. It was a insurance plan "just in case, you lived". In order to fix the long term proplems, we must first look at the obvious. But its so much funner to use it like a political football for both parties. The change in life expectancy, less workers, people choosing to have less children, non of theese factors were originally factored in. Now we must factor them into the future. Or we can just keep up the political game of using the issue for political advantage. which takes the interest in fixing it off the table. Too valuable for getting elected. Which is of more value, the last years security of generations of Americans or the political advantage gained by both parties, when it remains always one generation from collasping.

August 14 2010 at 9:21 AM Report abuse rate up rate down Reply
servelanb7

Why didn't you mention the fact that Social Security has been bled out by the Feds by years of borrowing from its funds? No wonder it's running out of money...

August 10 2010 at 9:43 AM Report abuse rate up rate down Reply
Jack

cut social security off start big war

August 08 2010 at 6:34 AM Report abuse +1 rate up rate down Reply
sharpbob2

I don't know where the author pulled those rate numbers from. In the mid 1970's 4.95% was the rate paid by employees, and it has been 6.2% for a number of years now, not including Medicare. The percentage was 1% for more than 10 years after SS started, and reached 3% in 1960.

The SS trust fund exists only on paper. When more money was collected than was paid out, the surplus just reduced the deficit. Now the government will have to make up the shortage from other revenue and borrowing. So don't expect your money back. The only way that could be done is by collecting it from you in taxes, then "giving" it back.

August 08 2010 at 1:09 AM Report abuse rate up rate down Reply
Larry Schmidt

When is the goverment going to repay the money it borrowed from social security? They pay it back and we are good to go for a long time. Obama, give us our money back, you politicians owe it to us.

August 08 2010 at 12:05 AM Report abuse +3 rate up rate down Reply
Linda

THERE IS WAY TOO MUCH UNNECSSARY SSI GIVEN OUT, YOU CAN HAVE A CRIMINAL RECORD AND GO IN AND OUT OF JAIL AND YOUR CHECK WILL BE WAITING FOR YOU. ISN'T THAT NICE....PEOPLE WITH ADHD, MY PARENTS USED TO POP US ON THE BUTT FOR NOT PAYING ATTENTION, NOW YOU GET A CHECK FOR IT....

August 07 2010 at 11:29 PM Report abuse +3 rate up rate down Reply
goodfood4u

The previous info was found on http://www.ssa.gov/immigration/extension.htm I find this very disturbing

August 07 2010 at 11:19 PM Report abuse +1 rate up rate down Reply
goodfood4u

Temporary Extension of SSI Benefits for Some Noncitizens
Two-Year SSI Extension for Elderly And Disabled Refugees
On September 30, 2008, the Supplemental Security Income (SSI) Extension for Elderly and Disabled Refugees Act was signed into law (P.L. 110-328). This law provides for up to two years of additional benefits for certain SSI recipients who had their benefits terminated due to the seven-year time limit.

The seven-year SSI eligibility period for refugees, asylees, and certain other humanitarian immigrants (including victims of human trafficking) is extended up to two years, or three years for certain individuals during the period October 1, 2008 through September 30, 2011. To qualify, otherwise eligible noncitizens are required to sign a declaration indicating that they have made a good faith effort to pursue U.S. citizenship unless they are under age 18 or have an application for naturalization that is pending or has been approved.

If all SSI eligibility requirements are met, the two-year extension may apply retroactively to noncitizens whose SSI previously ceased due to the expiration of the seven-year period, but not earlier than October 1, 2008 even if all eligibility factors are met before that date.


This should not be happening!
This is BS-- Citizens that have paid into SS have a hard time getting what they have put in to SS.

August 07 2010 at 11:16 PM Report abuse +2 rate up rate down Reply
goodfood4u

Is it true that the children born in america of illegal immigrants receive ssi?

August 07 2010 at 11:04 PM Report abuse +2 rate up rate down Reply
Darla and Simon

We all knew this mess with SS was coming...once the baby boomers started to retire, law of averages...I laugh when I hear people blaming Obama for this mess. Those of us who have paid into all these years, will probably never see our return, and the younger generation doesn't have the sheer numbers or ambition to keep it running for us...and on into the future. Looks what's happened in Greece. I hope we don't end up like them :(

August 07 2010 at 10:54 PM Report abuse -1 rate up rate down Reply
2 replies to Darla and Simon's comment
GLEN McWILLIAMS

I laugh when I hear people blaming Bush for this mess.we all know this day will be coming when SS start,we probably need blame who start this SS thing,the maths just doesnt add up.who design this SS,his maths score was probably very low

August 09 2010 at 3:04 PM Report abuse rate up rate down Reply
GLEN McWILLIAMS

I laugh when I hear people blaming Bush for this mess.we all know this day will be coming when SS start,we probably need blame who start this SS thing,the maths just doesnt add up.who design this SS,his maths score was probably very low

August 09 2010 at 3:04 PM Report abuse rate up rate down Reply