Social Security insolvency is here
Politicians from both parties have been able to avoid Social Security’s impending insolvency for decades because bankruptcy was still years away. It was a little over the horizon, and for our irresponsible politicians, out of sight has been out of mind. But according to the latest Social Security trustees report this week, bankruptcy is upon us now. The Social Security trust fund is estimated to run out of money in 2032. That means whoever wins the next presidential election in 2028 will have no choice but to confront Social Security in the final year of a first term. Whoever is in office then will have surprising flexibility in deciding what happens next.
TL;DR
- Social Security trust fund estimated to run out of money in 2032.
- The president elected in 2028 will face the crisis in their final year of a first term.
- Past reforms in 1977 and 1983 raised taxes and cut benefits, but declining birth rates have strained the system.
- The trust fund's surplus consists of IOUs which are worthless, meaning payments add to the national debt.
- If the fund runs out, total benefits may need to be cut by 22%, with flexible implementation options due to legal silence.
- Recent presidential actions by Biden and Trump are cited as contributing to the accelerated insolvency.
- The crisis presents an opportunity to address national financial stability and declining reproduction rates.