The United States is getting older as a country. According to the U.S. Census Bureau, older adults will outnumber kids for the first time in U.S. history in the next twenty years. This transformation is partly due to the historical birthrates of the 1950’s and 1960’s. Since then, life expectancy has gone up, while fertility rates never reached the same height.
As the baby boomer generation enters its golden years, the country will need to address its social security programs. Currently, the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, estimates that the Social Security Trust Fund will dry up after 2034. This could lead to significantly decreased support for both current beneficiaries and future generations.
Tipping the scales
According to the 2019 OASDI Annual Report, 2020 will be the first year since 1982 where the costs of Social Security will outweigh its income. It is estimated that this will remain the case for the next 14 years, until the $2.9 trillion in reserves dry up.
If the country depletes the reserves, those receiving benefits from Old-Age and Survivors Insurance Fund (OASI) would see their monthly benefits reduced by 20%. This may lead to financial stress for those who depend on the program.
Social Security funding until 2052
New estimates show that Social Security Disability Insurance’s Fund (SSDI) may have a longer life span. While a year ago, the estimated date of depletion was 2032, a new estimate now predicts that the fund will remain solvent until 2052. This new estimate comes from a decrease of applications for the benefits since 2010 as well as a decline in beneficiaries.
While this is good news for those currently receiving SSDI benefits, it does not address the potential concerns for the 52 million Americans receiving benefits from OASI.
These statistics are likely to cause concern for those who are receiving benefits from the program or who will be on the plan in the next two decades. However the effects of depleting social security will likely affect the entire country, as the nation looks for new methods of generating resources to support an aging population.
