Newspaper article St Louis Post-Dispatch (MO)

Things to Know about Social Security at 80: Overhaul Time?

Newspaper article St Louis Post-Dispatch (MO)

Things to Know about Social Security at 80: Overhaul Time?

Article excerpt

WASHINGTON * Social Security turns 80 on Friday, and the massive retirement and disability program is showing its age.

Social Security's disability fund is projected to run dry next year. The retirement fund has enough money to pay full benefits until 2035. But once the fund is depleted, the shortfalls are projected to be enormous.

The stakes are huge: Nearly 60 million retirees, disabled workers, spouses and children get monthly Social Security payments, and that number that is projected to grow to 90 million over the next two decades.

And the timing is bad: Social Security faces these problems as fewer employers are offering traditional pensions, forcing older workers to think hard about how they will afford retirement.

"This is a program that's been immensely popular since it began," said Nancy LeaMond, executive vice president of AARP. "Increasingly, people recognize that saving for retirement is becoming harder and harder, and Social Security is becoming even more important."

President Franklin Delano Roosevelt signed the Social Security Act on Aug. 14, 1935. Here are things to know about the federal government's largest program on its 80th birthday:

DEMOGRAPHIC CHANGES

Social Security's long-term financial problems are largely a result of demographic changes. Every day, about 10,000 people in the United States turn 65. These are the baby boomers. Typical boomers, however, didn't have as many children as their parents did. As a result, relatively fewer workers are left to pay the payroll taxes that support Social Security. In 1960, there were more than five workers for every person receiving Social Security. Today there are fewer than three. In 20 years, there will be about two workers for every person getting benefits.

Americans are also living longer. In 1940, someone who was 65 could be expected to live about 14 more years, on average. Today, they can expect to live an additional 20 years, on average.

BENEFITS PAID

Last year, Social Security paid benefits of nearly $850 billion about a quarter of all federal spending. The average monthly payment is $1,221. That comes to about $14,700 a year. For most retirees, Social Security accounts for the majority of their income, according to the Social Security Administration.WHAT HAPPENS IN 2016?The trust fund that supports Social Security's disability program is projected to run dry in late 2016 right in the middle of the presidential campaign. If Congress allows that to happen, it will trigger an automatic 19 percent cut in benefits to the 11 million people who receive Social Security disability. Lawmakers could redirect tax revenue from Social Security's much bigger retirement program, as they have done in the past. If the tax revenue were redirected, the retirement fund would lose one year of solvency, so both the retirement program and the disability program would have enough money to pay full benefits until 2034. …

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