The Social Security Changes Proposed by Republicans Have a Serious Flaw
The Social Security program is facing a long-term funding shortfall of $22.4 trillion, a problem that can be attributed to the aging population. Specifically, birth rates have fallen and life expectancies have lengthened since the post-World War II baby boom, and retirees are now increasing in numbers more quickly than workers.
The ratio of workers to beneficiaries has dropped from 8.6 in 1955 to 2.7 in 2024, according to the Social Security Administration. That's problematic because Social Security is primarily funded by a dedicated payroll tax. With fewer workers paying into the program and more seniors drawing benefits, expenditures are rising more quickly than revenue. That trend is unsustainable and will lead to benefit cuts without Congressional intervention.
The precise timing is uncertain, but the Board of Trustees believes the Old-Age and Survivors Insurance (OASI) Trust Fund will be depleted by 2033. That Trust fund is the source of benefits paid to retired workers, spouses, and survivors. Once depleted, payroll taxes would cover an estimated 77% of scheduled payments, so an automatic across-the-board benefit cut of 23% would be possible.
Source Fool.com
