Social Security and the Baby Boomers

By Joni Douglas

Since it’s beginning, Social Security has always collected more money in payroll taxes than it has paid out in benefits. That has now changed. This year, Social Security is projected to pay out more in benefits than it collects in taxes. As the baby boomers retire and start receiving their Social Security checks more pressure is being applied to the feds to shore up Social Security coffers. As it stands now, the retirement nest egg of millions of Americans is now in the form of IOU’s from the federal government, payable to the Social Security Administration.

For years now, the federal government has raided the Social Security coffers to pay for anything and everything due to the steady stream of money pouring in from payroll taxes, while at the same fulfilling its obligation to all of the recipients of Social Security benefits. However, now that the benefits being paid out are greater than the amount coming in, the budget shortfall can not be ignored any longer. The IOU’s issued by the Treasury Department will have to be paid back. Now the government may have to borrow money, just to pay back the money it has already borrowed. The timing of this, strikes at a time when new budget proposals will post a record $1.5 trillion dollar deficit.

‘These shortfalls will not affect any current benefits. As long as the IOU’s last, the benefits will keep flowing. The program’s finances are deteriorating and the experts say this is a clear warning sign. Social Security is projected to drain its trust funds by 2037 unless Congress acts. There is real concern that the looming crisis may lead to reduce benefits. For decades now, regardless of which political party was in power, Congress has been raiding the Social Security cookie jar to pay for other programs thereby masking the budget deficits.’ The shocking amount due to Social Security is about $2.5 trillion dollars.

Current stats show that more than 52 million Americans receive benefits from Social Security. The average benefits range between $1,100 and $1,200 a month. Within the next years as the baby boomers reach retirement age, they will stop paying into the system and start collecting from the system. It is estimated that 78 million baby boomer will start to receive benefits with in the next 10 – 15 years. Social Security trust funds will shrink, running out of money by 2037 according to the trustees who oversee the program. The current recession adds to the problem, making things worse. Payroll tax receipts are down with fewer taxes received due to higher unemployment rates, the loss of nearly 8 million jobs, early retirement incentives and from older workers laid off or forced into retirement.