How Would You Strengthen Social Security?
The American Association of Retired Persons (AARP) champions positive social change and recently sponsored a TownHall meeting in Alexandria, VA that was designed to address the challenges of Social Security in the next twenty years. According to the AARP (www.aarp.org) if the U.S. Treasury repays the money it has borrowed from Social Security, by 2033 Social Security can pay 75 percent of benefits, and by 2086 Social Security can pay 73 percent of benefits. Overall, after 2033 Social Security can pay about 75 percent of benefits for the next 75 years (or more) if no changes are made. This indicates a 25 percent shortfall.
This pending shortfall has made many individuals nervous. Some people contemplate filing for Social Security benefits early to make certain they are enrolled before Social Security “goes broke”. You may ask yourself why this problem now? It seems that longevity and fewer workers entering the workforce have had a large impact.
- Increased longevity: In 1940, a 65-year-old could expect to live an additional 12 or 13 years. Today a 65-year-old can expect to live another 20 years. This means that more individuals are collecting benefits, for a longer period of time. The AARP (http://www.aarp.org/politics-society/advocacy/info-04-2012/youve-earned-a-say.html) reports that the number of Social Security beneficiaries is expected to rise from 57 million in 2012 to nearly 90 million in 2033.
- A lower worker-to-beneficiary ratio: Another AARP statistic indicates that the drop in birthrates and the increase in life expectancies have reduced the number of workers per beneficiary and the trend is expected to continue. Today there are 2.8 workers for each person who receives Social Security benefits. By 2033, the ratio will be 2.1 workers for each beneficiary.
It is important to keep in mind that the expected 25 percent shortfall will not go away unless something changes. The AARP lists about a dozen options that are currently being discussed in Congress. Which options do you agree with? Which options do you oppose? What are you going to do about it? Use the AARP Strenghten Social Security Tool located at http://www.aarp.org/work/social-security/info-06-2012/strengthen-social-security-youve-earned-a-say.html?intcmp=ADV-YEAS-SSST-BTN-TOP to see if your choices can fill the gap.