R.I.P., Social Security

It is the worst-kept secret in the history of worst-kept secrets: Social Security is going to dry up. Soon.

This year signaled the start of a long, painful decline when -- for the first time since 1982 -- the Social Security Administration had more people to pay out than revenue coming in, forcing them to dip into the trust fund.

Operating under a one trillion dollar budget (a whopping 25% of the federal budget), this generous government benefit is a ticking time bomb on track to blow up when we need it most. A necessary social insurance program designed to support retirees, disabled groups and surviving family members of deceased workers, it has long been known the benefit would spiral into a demographic-induced bankruptcy somewhere in the ballpark of 2035 -- or earlier, according to recent estimates. The unknown part is what we're going to do about it.

2035, for all intents and purposes, is right around the corner.

How immense is the problem? Sixty-four million Americans depend on Social Security, and more than 33% of seniors depend on it as their sole income source. But these figures pale in comparison to the dependency we will see by the time 2030 rolls around, when the "old-age dependency ratio" (the number of retirement aged people per 100 working Americans) rises from 25 to 35. The Baby Boomer age wave is upon us, with staggering projections: by 2050, the 60+ population is expected to double, and the 85+ population expected to triple. Aging Boomers, longer life spans, and declining population growth and fertility rates -- which means less people paying into the system -- spells disaster.

What are we going to do about it?

According to the experts, there are two clear options to fix Social Security. The first is to raise FICA taxes, as much as 1.5% (or more). The second is to reduce benefits (current average monthly payout is $1400). They could also raise the retirement age, or tax all wage income, but those changes alone won't cut it. There are, of course, two additional much-less-spoken-about options: 1) borrow more, or 2) do nothing, and let the well dry up.

None of this sounds promising. Worse yet, we are bound to see the Social Security crisis heat up in the face of upcoming election cycles, in which the benefit is used as ammunition for partisan warfare which will serve to further complicate the matter and likely impede any progress that stands to be made.

What will we do with a nation of elderly and disabled folks who don't have enough to get by on? And what does a future without Social Security look like for today's generations, a quarter of which already believe the option will not be available for them when their time comes around? The solution remains to be seen. Absent some type of creative socialist reform, this problem is here to stay. Expect a prolonged crisis of unprecedented proportions -- an elephant in the room we have ignored for decades.

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