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Please don’t count on bigger Social Security checks

Nilus Mattive

Lately, I’ve been very aggressive in sounding the alarm on Social Security’s problems.

There are two reasons for that:

First, the sheer scope of this issue is huge.

It doesn’t matter if you’re a young worker paying a good portion of your income into the system or an older American collecting the benefits you’ve already been promised. Social Security affects nearly every single one of us in very significant ways.

Second, despite the program’s worsening condition, practically nobody else seems concerned!

For example, last week I came across a new article on The Huffington Post website from Richard Eskow, a senior fellow with the Campaign for America’s Future.

His suggestion? We should sharply INCREASE Social Security benefits. In his own words:

“The concept of increasing Social Security has been around for a while. Strengthen Social Security, a coalition of 320 groups, reviewed the program’s ability to meet current and future needs and concluded that benefits should be increased rather than cut. The National Academy for Social Insurance proposed increasing benefits for vulnerable groups. The AFL-CIO has called for raising benefits. We got in the game, too, suggesting that a 15 percent increase in 2011 be included as part of a forward-thinking progressive agenda.”

There’s no doubt that Social Security recipients would absolutely love to get bigger benefit payments in today’s challenging environment.

But I have no idea how anyone thinks our country has the financial wherewithal to actually do such a thing right now.

After all, Social Security is currently running annual deficits and won’t even be able to pay out all the benefits that have ALREADY been promised!

Of course, why should reality prevent us from handing out even more money we don’t have?

This Type of Thinking is Exactly Why

Social Security is Already in Trouble …

If you look at Social Security’s rather short history, you’ll see that it has been continually expanded over the years — a simple fact that goes a long way toward explaining the system’s current problems.

As I explain in my video alert, Social Security initially covered about half of the population and the tax rate for the program was just 2 percent.

Today, Social Security covers virtually everyone — including many people who have never contributed a penny into the system. That’s the primary reason why the Social Security tax rate now stands at 12.4 percent — 6.2 TIMES the original rate.

And, again, even that rate is not high enough to support all the money that is being paid out in annual benefits.

New Social Security Awards in 2011

Never forget that Social Security has become far more than a simple safety net for American workers who have reached retirement age. It now provides monthly payments to millions of non-working spouses, younger disabled workers, and even their dependents.

Helping all of these groups is the right thing to do in spirit. But it also creates a much bigger obligation that has to be carried by current (and future) workers … at a time when our country’s demographics are going against the program’s design.

For starters, recipients are simply living longer. In 1940, the average 65-year-old lived another 14 years. Today, the number is 20. That’s an extra six years of payments that have to be made to the typical beneficiary.

Meanwhile, the number of workers paying for each Social Security beneficiary is projected to shrink 25 percent through 2033!

The math problems here are pretty obvious. So I have no idea how anyone can suggest that the solution is expanding Social Security right now … nor would I want to see anyone pin their hopes on such an outcome.

The grim reality is that it’s far more likely we will see benefit cuts, clawbacks, increased retirement ages, and another increase in the payroll tax. Therefore, if you haven’t yet prepared yourself for these possibilities, I suggest you take some of my recommended steps right now.

Best wishes,


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  • iroiban

    The amount of debt owed to the Social Security Trust “Fund” seems a mystery. Is there actually such a fund?
    I recall Pres Clinton and VP Gore mentioning setting up a “lock box” for SSI funds but nothing came of it.
    Is this fund just a paper entry on balance sheet the US Treas tracks. I know taxes paid from wage earners go into and out of(to pay retirees) some account but I also hear Congress can access this “fund” -account” to meet govt expenitures. How do realists describe the system?