Almost everyone in the country either is or will receive Social Security. This means we all got some bad news recently about the outlook for this massive retirement program. N.C. State University economist Mike Walden gives the details.
“Last year Social Security ran a deficit, meaning that it spent more than it took in. This is the first deficit in decades. Most experts, at the time, thought that the deficit was temporary. It was due to the economy, and they projected that in a couple of years Social Security would go back to running a surplus — that is, taking in more than it spends.
“However now the analysts who look at Social Security say, ‘Guess what? We were wrong last year. The deficits that Social Security had been having will continue, and they are going to be permanent.’ And so the expectation now is that Social Security is going to continue paying out more than it takes in.
“Now that is not going to create an immediate problem because Social Security actually has a very large savings account, where they have accumulated a surplus. So Social Security is going to begin to draw down on those surpluses. The current estimate is the current surpluses will be gone by the year 2037.
“So at that point if Social Security continues to pay out more than it takes in, it simply won’t be able to pay out all that it has promised. In fact, the estimate is that recipients of Social Security after 2037 will receive maybe, tops, three-quarters of what they have been promised.
“All this means that the urgency to make some changes to Social Security to put it back on a long-run stable fiscal path are certainly now higher.”