Social Security is failing even faster than we thought.
The Social Security Administration last year reported that the fund will probably run out of money in 2036.
However, the Congressional Budget Office recently said the SSA estimates for its retiree and disability funds were about $800 billion too high, writes Chuck Saletta of The Motley Fool in an article for Daily Finance.
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This year, the SSA will probably move up its prediction for when Social Security will run out of money, Saletta says. In fact, its projected year for when the program will run dry has been moving earlier and earlier, from 2041 estimated in 2008 to 2036 in 2011.
"With several hundred billion in projected 2020 dollars vanishing in less than a year," he states, "it wouldn't be surprising to see the 2012 Trustees Report lopping another year or two off the projected run-out-of-cash date."
The falling estimates emphasize the fact that worker's cannot expect to receive full Social Security benefits when they retire.
When the Social Security trust fund starts running on empty, it will probably slash benefits by about a quarter, he says. Prospective retirees will need $92,175 in additional savings to fill that gap. With Social Security on borrowed time, workers must start saving now or they won't be able to make up for lost time.
The SSA separate fund for disabilities will run out of money even sooner, perhaps in 2016, The Wall Street Journal reports.
Reducing benefits, increasing taxes, or a combination of both can improve the fund's finances.
The White House and Republican Congressmen wrangled over shoring up Social Security during last year's debt ceiling fight but couldn't reach a deal, Treasury Secretary Timothy Geithner said during testimony before Congress.
"We did spend quite a bit of time with the Republican leadership in the summer exploring ways to do that and we found frankly we are too far apart," Geithner said.
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