Social Security could run out of money to make full payments to retirees as soon as 2032. NPR’s Planet Money team examines possible solutions.
Transcription
STEVE INSKEEP, HOST:
Social Security is facing a test. To be more specific, Congress faces a test: whether it will tackle a problem with Social Security. In just six years, the seniors program won’t have enough money to make full payments. From NPR’s Planet Money podcast, Erika Beras explains why accounts are low and what potential solutions are.
ERIKA BERAS, BYLINE: The number one reason Social Security is short of money: baby boomers. They retire, collect their social security contributions and live longer. And there are many of them, including Steve Goss, who was an actuary for the Social Security Administration for 52 years.
STEVE GOSS: Social Security now spends more on benefits than it takes in revenue.
BERAS: That seems to be a problem.
GOSS: It’s definitely a problem.
BERAS: Social security is like a checking account: all workers pay into it and it takes at least as much money to get in as to get out. But since 2010, we have been spending more than we save. And in six years, payments to retirees could be reduced by 22%. But there are proposals for how to generate more money, like raising payroll taxes, you know, the money that comes from your paycheck for Social Security. That alone would solve the whole problem. Now, Steve is unbiased towards any specific idea. He’s more of the type, of course, but that’s up to the American people and obviously Congress. So we could raise taxes or do a combination of things, like raise the retirement age.
How feasible would it be to implement this?
GOSS: Very doable. I mean, Social Security is already receiving all the information it needs to be able to implement this measure if it were adopted.
BERAS: Or the way it works now, if you make more than $184,500 a year, you don’t pay Social Security taxes on earnings above that annual amount. So why not tax these people more? This might help. Or, with fewer people having fewer babies, perhaps more immigration – enticing more workers to pay into the program.
GOSS: Yes. Historically, there is no doubt that positive net immigration has been a plus for the United States. It’s almost like we had a higher birth rate 25 or 30 years ago.
BERAS: Steve says the longer we wait to solve the problem, the worse the problem will be, because this great economic experiment simply has no silver bullet. But at Planet Money, we had one last idea for a simple solution: Social Security still has a few billion dollars left. Why not invest it in the stock market? As Steve says, the United States talked about it a lot in the 1990s. And at the time, Canada actually did it.
GOSS: And it turns out that this investment fund has grown since the 1990s to the point where I was recently talking with people in Canada, their trust fund of stocks is now equal to 25% of their gross domestic product.
BERAS: Wow.
GOSS: So it was a wise decision, and they benefited greatly from it.
BERAS: But if the United States did it, the benefits wouldn’t be enough because the fund is so depleted. We spend it every day. So too late for us, but happy for you, Canada.
Erika Beras, NPR News.
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