Could Social Security go bankrupt? Not Likely


“I’ll never get a cent from Social Security.”

That thinking couldn’t be more wrong. Social Security is one of the most popular government programs around, as our political leaders well understand – Social Security will be around as long as democracy reigns, in other words.

The news media often don’t help by running scary headlines suggesting that the Social Security Trust Fund will run out of money in the not-too-distant future. So it is understandable that many people mistakenly conclude that they won’t receive any benefits.

The fact is that under current law, the Social Security Trust Fund could run bone dry and you’d still get most of your benefits. You see, the Trust Fund is only a supplemental source of funding for Social Security. Most of your Social Security retirement and disability benefits are actually funded from taxes collected each pay period from current workers (That’s the deduction for FICA taxes on your paycheck).

The bottom line: As long as workers are paying FICA taxes, there will be money to pay for Social Security benefits for retirees and their beneficiaries…


And what happens when there is more outgo to the retirees than there is income from the contributing workers?


The majority will simply hire more gunmen and give them badges. Who knows maybe they could put up a wall to keep their victims here.



FTR, I am collecting SS, but I had to take a 50% hit because of my federal pension.


While I think you are correct that it won’t end due to political pressure, there will have to be changes to the source of funding. You see as families have fewer children, the number of taxpayers funding each person goes down. (This ratio in this example isn’t correct but here’s the concept) When Social Security began there were say 30 people paying into the system for each worker receiving benefits. Now it’s down to 10 and will soon be down to 2. So unless they are going to tax exhorbitantly, say 25%-35% just for FICA, there will have to be other streams of income to fund the program.

As stated though, SS will still be around.


If things really got bad, they could lift the cap on maximum FICA deductions which right now is capped at $117,000. Any monies earned after that are not taxed for FICA. It would go a long way to kept SS afloat; of course the people making over that amount would no doubt squawk.


What an crock that article is. And it is intentionally deceptive to give false hope and confidence to people as seen by this thread.

The SS Trust Fund is a collection of IOU’s from an entity (the US fed govt) which is $17 TRILLION in debt, and that debt is growing by leaps and bounds.

Additionally, the interest payments on this debt is going to grow substantially in the near future when interest rates rise as they must (we are at historical lows). When this happens, interest payments will double or triple, if we are lucky.

This increased interest payment will eat up vast sections of tax revenue, including SS taxes. (Politicians pretend that these payments are separate from normal tax revenue, when they aren’t)

It is a matter of math and time. SS is going broke, and it will collapse.


So this left-wing pundit misses Baghdad Bob, huh?

I think I prefer the estimates from the Social Security Trustees.

What the Social Security Trustees don’t discuss is the impact on the economy going forward. Excess Social Security funds are loaned to the government’s general fund – the “trust fund” receives so-called “special issue” bonds in exchange for the excess FICA and Medicare taxes received.

When there are insufficient revenues from FICA or Medicare to pay the current obligations (OASI = old age and survivors insurance, DI = disability insurance, HI = health insurance), then the “special issue” bonds are sold back to the Treasury. You can tell when that happens when you see a negative slope on the lines in the chart, above.

What does that mean, in practical terms?

In Fiscal Year 2013 (which ended on 9/30/13), it means:

For Social Security, we paid out 807,841,000,000 dollars in 2013
For Social Security, we collected 575,555,000,000 dollars in 2013

This means that $232,286,000,000 worth of “special issue bonds” were redeemed from the general fund (that money used to redeem those bonds could have been used for other purposes…or just not collected from the hard working American people).

Same thing for Medicare (the deficit there was $282,539,000,000 in 2013)

BTW, the numbers above come from the Obama Administration’s Office of Management and Budget.

Here’s the bottom line: the longer we go, the more the general fund is going to be depleted because of shortfalls in the amount of FICA and Medicare taxes collected. Eventually, (in 2016 for Disability Insurance, 2026 for Medicare, and 2035 for Old Age and Survivor’s Insurance) there will no longer be a trust fund and all the deficit will just come straight from the General Fund (forget about the “special interest bonds”).

This is not right-wing, this is not left-wing…this is just arithmetic.

There are a limited subset of choices that can be made:

  • Limit the payouts (adjust the age of start, adjust the amounts, or something else)
  • Increase FICA and Medicare Taxes
  • Decrease the amount the government spends for other purposes
  • Borrow more money
  • Print more money

Getting rid of social security, as the author stated, is not really an option, as that would be guaranteed to be the end of a politician’s career. Raising FICA taxes as the author suggests? I don’t see that as a viable option either for two reasons: 1) it would unequally harm the poor; 2) it is just a patch but won’t actually solve the problem (they’ve done it before and it was just a short-term fix).

The only way to reverse this is to fix the lagging total fertility rate. As long as the TFR is below 2.1, the population will continue to age…which means fewer people of working age and more people of retirement age:

The only way to actually fix social security is for the fertility rate to go up. Pity that the author of this piece doesn’t seem to comprehend that point.


Individual states will pass laws allowing them to collect from the children of people they provided benefits to. For example, in Idaho, if you are indigent and receive hospital services, the hospital is allowed to get the money you couldn’t pay from your spouse. If they don’t exist or have the money, they can go next to your children. After that they can go to your parents. Oh, and they will cross state lines to get the money. States tend to be more relentless than the Feds.


[quote=markomalley]The only way to actually fix social security is for the fertility rate to go up. Pity that the author of this piece doesn’t seem to comprehend that point.

This is the key point, and it seems to be one which no one in the government wishes to discuss.


There is no money in the SS fund, just IOUs. However, technically it will never go broke. There is no requirement that the government have such a fund in the first place, so all they have to do is vote it out of existence.


There is also no requirement that the government is obligated to pay SS benefits in the first place.


They will either raise the payroll tax rate, push back the eligibility age, or reduce benefits, or do all three. These have all already been talked about as solutions.



Excess winter deaths hit 31,000 last winter, Office for National Statistics
A mild December was followed by the coldest March since 1962
Male deaths rose from 10,590 to 13,100, female deaths up 13,610 to 18,000
Campaigners condemn latest figures as a ‘national scandal’
Ministers scramble to hire more doctors and nurses for this winter


Gosh, are these deaths as blame worthy as the Benghazi victims? :shrug:



Social Security is already bankrupt. I’ve been paying in for nearly 50 years, and I promise you not one cent that I paid in was put aside for my retirement. It was all spent on other things. It has been since the Democrats in 1967 saw a large pile of money and couldn’t help but steal it from citizens and spend it on their political agenda. Republicans have been complicit in this, the greatest single theft of retirement funds in American history.

If a private pension fund had done this, they’d all be in jail. What the government has done to Social Security makes Bernie Madoff look like the Artful Dodger, a two-bit street-kid pick-pocket.





IMHO this article is an example of the co-operation the media shows the government to publish its propaganda to keep the masses in line. :mad:


What does that have to do with what I posted?


I wouldn’t worry about it. Janet Yellen et al will just print it.


Asking whether Social Security could go bankrupt is just another way of asking whether the larger society could someday lack the resources (or the will) to support its elderly and disabled. In a society with a below replacement level total fertility rate, the population will continue to age, and the ratio of workers to elderly will decline, making it harder and harder to accomplish.

The government can always just print money of course, or raise taxes. But printing money causes inflation, and raising taxes on a dwindling population doesn’t work forever.

What’s needed is a larger tax base of future workers, i.e. more kids, and a growing population.

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