Recently a question was asked to Barack Obama about Social Security. The President remarked: “So here’s the thing. Social Security is not in a crisis.” Hold up a minute, maybe the President has not read the Trustee’s of Social Security Annual report issued August 5th 2010. The “Social Security Act” requires the Trustees of Social Security Trust Fund to report annually on the status of the fund and make projections about the funds ability to finance promised benefits payments in the future. If the Trustees feel as if there will be a short fall they are suppose to recommend ways to make up the shortfall.
According to Heritage Foundation financial and pension expert David C. Johns the President is wrong. The Report released shows that the program will run cash-flow deficits in both 2010 and 2011 due to the effects of the recession. But later in 2015, Social Security will begin to suffer from massive permanent annual deficits. What is even more alarming is that by 2037 the funds will be exhausted, gone, depleted, bankrupt. But present recipients are in good shape for at least five more years until 2015, they will receive their benefits and cost of living increases as usually. It’s after 2015 that’s the problem. So in a way Barack Obama is right: there is not a crisis NOW. Its tomorrow, next year, and a few years down the road, when Barack Obama and the present Congressional members are all likely to be gone. It’s someone else problem! The report indicated that over the next 75 years, Social Security will owe about $7.9 Trillion more than it will receive from payroll taxes. If congress keeps delaying a fix for Social Security the costly reform is going to be, and the higher the probability that Congress will simply raise taxes to cover the program deficits. The question is what about our children and grandchildren? Will they be likely to have the same government benefits that we have now? It appears to be bleak, unless someone has the fortitude to stand up and fight for all of our future.
Sources: Disclaimer I’m Donald R. Rice, President of Money Management Services, Inc. a SEC Registered Investment Advisor. This Blog post on “Social Security in Trouble” should NOT be construed as personalized advice. Donald R. Rice CFP®, AIF®
Andy graduated from the University of Alabama-Birmingham with a B.S. degree in Accounting. He is a Registered Investment Advisor Representative of Money Management Services, Inc and holds the designations of CPA (Certified Public Accountant), AIF® (Accredited Investment Fiduciary), CTS™ (Certified Tax Specialist), and WMS (Wealth Management Specialist). As an advisor, Andrew specializes in comprehensive financial planning, estate tax planning, personal taxation planning, retirement income distribution planning, wealth accumulation, personalized portfolio management, and fiduciary investment management services.