According to an annual report by the government that was published on Thursday, the Social Security trust fund that gives retirement benefits to most Americans will run out of money in 12 years by 2034. This is one year less than what was expected though the numbers are better than the original forecast. The COVID pandemic was responsible for the shortened period. Older Americans will also see lesser payments and higher health-care costs.
Trustees for the fund say that the program would have to pay benefits that are in excess of its income, this year. This was anticipated last year due to the pandemic. This is the first time this will happen as the trust fund had more revenue than costs these past five years or more.
The pandemic led to the widespread shutdown of several businesses. There were also job layoffs that led to decreased payroll revenues, which is the main source of revenue for the trust fund. Many survivors also had long term health damages which increased costs.
However, there were also a large number of deaths due to COVID-19. Elderly people as well as those who had underlying health conditions, succumbed to the infection. This could decrease health costs as the group that survives could be a healthier group of beneficiaries.
The pandemic is not the only factor that has affected Social Security. A huge number of baby boomers are expected to retire in the next two decades which will increase social security payouts.
There are also low birth rates across the nation, and this will also affect the trust fund as the revenues that will be accrued due to payroll of the new labor force will be less than the amounts that will go out as benefits to the retirees.
As per recent estimates retirees will receive full benefits till 2033 after which they will get about 76 percent benefits unless Congress decides to fund the program. However, the disability program is expected to run out in 2057, which is also eight years earlier than the 2020 forecast.
The report noted that the Social Security trust funds forecast decreased due to a large decline in anticipated revenues although benefit payouts were the same.