Is There a Crisis with Social Security?

There still seems to be some debate on whether the Social Security Trust Funds are facing a crisis and require changes to the Social Security program for them to remain well funded.  As long as that debate exists there’s little chance that any meaningful reforms will be made.

There are two sides to the debate.  One side talks about the size of the trust fund balances, the fact that those balances have been growing over the years and the fact that the trust funds have been able to meet all their obligations in past years as evidence that there isn’t an immediate crisis.

The other side talks about the fact that the number of those drawing benefits is growing rapidly, especially now with the beginning of the retirement of the Baby Boomer generation.  They talk about the trust fund projections showing that the balances will be decreasing rapidly in the coming years and that the burden on future generations of workers will become unsustainable without fundamental reforms.

Let’s look at the comparison of  some information from the 2005 and 2013 trustee reports.

Some statistics on the change from 2004 to 2012:

-          Increase in workers contributing to Social Security:                   2.5%

      -          Increase in those receiving benefits from Social Security:        18.8%
      -          Increase in annual benefits paid:                                                59.4%
      -          Increase in total trust fund income:                                            27.7%
      -          Decrease in annual surplus:                                                       -67.3%
      -          Increase in unfunded liability for Social Security:                   140.0%

http://www.ssa.gov/history/reports/trust/trustreports.html  (Reports on the year 2004)

http://www.ssa.gov/OACT/TR/TR05/index.html  (Reports on the year 2012)

In additional postings we’ll look at what some of the parties on each side are saying on this topic.