Why Social Security is Running Out of Money


social-securityMore than 55 million Americans receive Social Security benefits, annually, making it the nation’s largest social welfare program.  725 billion dollars of your payroll and income taxes last year went to Social Security disbursements  — That’s about 60 billion dollars in benefits each month.  It’s no wonder politicians on both sides of the aisle are always trying to convince voters that they have the plan to keep Social Security intact.

The problem is Social Security, as we know it, is currently living on borrowed time.  To understand the issue let’s first take a quick history lesson.

The Social Security tax was created as part of President Franklin D. Roosevelt’s New Deal. Born out of the Great Depression, Social Security was originally a retirement program-nothing more. Now, the program distributes several social welfare and insurance benefits.

Funded largely by payroll taxes, Social Security keeps roughly 40 percent of all Americans aged 65 or older out of poverty. For 26 percent of retirees, Social Security is their only source of income.  So why is the system is running out of money?

The money you pay towards Social Security does not go into a personal account for when you retire. Instead, Social Security is a “pay as you go” program meaning the money that is collected now is used towards current payouts. So…current benefactors rely on the current work force to fund their payments.  As baby boomers continue to retire at a record clip, approximately 10,000 on any given day, this model becomes harder to maintain. Back in 1950, there were 7.11 workers per retiree. That number today is 4.5 and in 30 years, economists estimate that number will be 2.6 workers for every retiree.

For the first time in thirty years, Social Security payouts exceeded non-interest income in 2010 and 2011.  The difference between the money coming out and going in was about $45 billion dollars in 2011. While there is “extra” money in the Social Security “bank account” called a “trust fund,” to offset the difference, the number of beneficiaries will continue to grow at a substantially faster rate than the number of covered workers.

The Board of Trustees estimate that in 2033 all the money in the Social Security “bank account” will be depleted. That’s three years earlier than estimated just last year.   This means that workers in their forties fifties today may not have access to the Social Security benefits that they’ve paid into when they retire.

The third rail of American politics, Social Security is a hot topic that has both sides of the political aisle debating how best to save benefits for future generations.


{Matzav.com Newscenter}


  1. thats why a person should not depend on ANY government programs BUT keep your Bitachon & emunah (faith & trust) in Hashem &turn straight to Hashem for help, for then you will lack nothing (tehillim chapter 34)

    save yourself now & depend on HASHEM alone & nobody else (not the shver or the government etc…)

  2. Social Security is not a welfare program. We pay into it in order to eventually get back. Like any other Government program it is mismanaged and full of wasteful spending. I’m sure of 2 things 1-If a choice of private companies would be able to compete to hold, manage & grow your social security dollars until retirement this wouldn’t be a problem 2-If a private company acted the way the SSA acts, they’d be prosecuted like Bernie Madoff

  3. Social security is losing money because the wicked at the top of the food chain hate to see the future as a polling of dignified Americans who have a future on a social security system. Thus the tax is not increased among the super special expensive high wage earners. Go back to Bermuda the 5th time this year if you want!

  4. Fine and noble words, moshe chaim #1, but what about the aphorism that G-d helps those who help themselves? Or perhaps the word “providence” does not appear in your vocabulary?

    Put in even more topical terms, who is better off: a baal habayit who had the foresight to take out property and flood insurance, or someone who believed that ” a person should not depend on ANY government programs BUT keep your Bitachon & emunah (faith & trust) in Hashem &turn straight to Hashem for help, for then you will lack nothing (tehillim chapter 34)”?

    Trust in G-d is a commendable concept, but it would be more sensible to make secular arrangements, too.

  5. Social Security is a relativly easy fix. Up the retirement age and/or use chain-weighted CPI for COLA. Dont all the seniors kick me in the nuts at once now; take turns.

  6. Social security isn’t running out of money. In fact, it’s being skimmed to get money for the general fund. Do you know that Social Security taxes are only taken out of the first $110,000 of income? If you’re making a million, you still pay taxes only on that first $110,000, but you’re still entitled to get social security EVEN IF YOU’RE A MILLIONAIRE.

    Keep taxing up the income scale, and we won’t be hurting for money. I’ve paid social security taxes on 100% of my income all my life. Why should some stockbroker who makes 3 million still only pay on the first $110,000 – a mere 5%?

  7. #1: Please. I don’t know about you, but I’m not a big enough tzaddik to set my hishtadlus to zero, and rely entirely on bitachon. Nor am I allowed to halachically.

    BTW, emunah doesn’t mean faith. It means loyalty. Big difference.

  8. Social Security is what I’ve been paying for all my life. The government is obligated to give me my money back. Likewise for everyone on Social Security – it’s based on how much you paid in.

    You mess with my social security payments, you’re out of office as of yesterday. We boomers don’t like hearing that we’re entitlement junkies when we’ve been paying for this stuff all our lives. Same for Medicare. If you work on the books, take a look at your pay stub. That “FICA” contains your Social Security and Medicare taxes. If you work not on the books, better get on them quick, because you’re stealing from the tzibur.


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