Social Security in 2033 will see its surplus completely eaten away as taxes collected would only cover 75 percent of the benefits it needs to pay, the program’s trustees warned.
The now-$2.7 trillion surplus of the program is expected to dwindle as baby boomers flood Social Security with benefit applications, the Associated Press reported. The program produced surpluses for three decades as the taxes collected outpaced benefits for retirees and disabled workers, the report noted, but those have since dried up.
In 2010, Social Security for the first time started paying out more than it was taking in, leading to a situation where Social Security in 2033 is operating at a deficit with no excess left to make up the difference.
“To me, urgent doesn’t begin to describe it,” Chuck Blahous, one of the public trustees overseeing Social Security, told the Associated Press. “I would say we’re somewhere between critical and too late to deal with it.”
Unless Congress takes action to turn the situation around, Social Security in 2033 would only be able to fund three-quarters of benefits. But, because the situation is still more than 20 years away, there is little urgency on either side of the aisle to tackle the contentious issue.
The Social Security shortfall in 2033 is expected to reach $623 billion, the trustees said in a recent report. It would continue to grow from there, reaching $1 trillion in 2045 and $7 trillion in 2086.
Social Security reform looks to be a major issue in the 2012 presidential election, especially with Republican Mitt Romney’s selection of Congressman Paul Ryan as a running mate. Ryan, the chairman of the House Budget Committee, has made deficit reduction his central issue and plans to do so with a plan that would slash entitlement programs.
Ryan has been a proponent of a system that would allow workers to invest part of their income into private investment accounts, Yahoo News pointed out. Though his approach has drawn criticism from Democrats for what they see as harsh cuts to Medicare, Ryan has been one of the few politicians willing to lay out a detail plan on how to face deficits situations like America will see with Social Security in 2033.