Is Today the Beginning of the End for Social Security?

Posted on 16. Oct, 2007 by in Credit & Debt, News, Saving & Investing

Does anyone know who this woman is, or why she is so special?

This woman, Kathleen Casey-Kirschling, filed for early retirement Monday, becoming the first baby boomer to start collecting Social Security. Born one second after midnight in January 1946, the retired teacher leads the way for as many as 80 million individuals who will qualify for the retirement payout. And thus begins the end of social security…

What? Do you think I’m being a little too over-dramatic? Well, David Walker agrees with me! He’s the comptroller general of the Government Accountability Office, Congress’ legislative arm, who warned the Social Security system will soon have more recipients coming than it can afford to pay out.

“We face a tsunami of spending due primarily to the retirement of the baby boom generation and rising health care costs,” Walker said. “So what’s happened is we’ve gone from 16 workers paying into Social Security for every person drawing benefits in 1950 to 3.3 to one today, and we’re going down to two to one by the time the boomers retire in big numbers and that’s about where it will stay over the long run.”

Democratic Representative Tim Penny is also worried.

“We’re going to have tens of thousands of baby boomers retiring every week over the next decade or so and that means that by time we get to 2017, just 10 years away, we will no longer be collecting enough payroll taxes to pay Social Security benefits.”

Under current law, Social Security won’t have enough money to pay promised benefits in 2041, but there is another crunch much, much sooner, the result of the the federal government relying on Social Security to pay for its annual spending.

When Social Security gets payroll taxes it pays out most of the money in benefits. The rest is supposed to go into a trust fund. Instead the government, in it’s infinite wisdom, has been spending the money on other government programs, and putting IOUs into the trust. When Social Security needs the money it’ll turn to the government waiting for the payback. But the government won’t likely have any. It’s estimated that over the next 75 years between Social Security, Medicaid and other entitlements, the federal government will be in a $50 trillion hole.

So by the time I hit retirement age… I’ll be pulling in a nice $3/month from the government, after paying thousands and thousands of dollars into it during my lifetime.

That’s why I’m a little worried…

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5 Responses to “Is Today the Beginning of the End for Social Security?”

  1. This scenario will be another problem for the people.

  2. Nicole

    17. Oct, 2007

    But, haven’t you heard? There’s not really a social security crisis…

  3. t h rive

    17. Oct, 2007

    I would like to believe that the government by then would have some key tax and policy shifts so that you all don’t get shafted – but pile that on top of the rest of the National debt this last 8 years has put you in. War costs. out. of. control. Furthermore, the US’s debt is owned by powerhouses like China and the Middle East oil nations.

    On anther note, the cashing out of RSPs (IRA’s in the US?) in massive numbers is said to surely have an effect soon on the rest of the markets. I dunno though, I guess we’ll see.

    Good luck.

  4. Microsoft Great Plains

    17. Oct, 2007

    I think for the current system to remain in place, the payroll tax will have to be increased by nearly half, that is not a burden I want to place on my children or future grandchildren. political views aside, SS has to be reformed and it has to be done now before it is too late.

Trackbacks/Pingbacks

  1. » linklings, October 17, 2007 brip blap: life, simply improved - October 17, 2007

    […] Is Today the Beginning of the End for Social Security?: I really don’t think the Baby Boomers are going to be the disaster everyone thinks they are. Sure, we’re going to have ever so slightly higher taxes, or means testing, or something along those lines but I doubt Social Security is going to completely implode. Then again, I thought the Jets were going to challenge the Patriots this year so my judgment is suspect. (@ Bean Counter Blog) […]

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