Who’s gonna pay for your Social Security?

Erika Beras (0:00)

This is Planet Money, from NPR.

One of the greatest economic experiments in the history of the United States is in for its biggest test yet. It's an experiment that started nearly 100 years ago.

Jeff Guo (0:18)

Yeah, picture this. The US has rapidly industrialized, millions of people have moved to cities for factory jobs, and all this change is leaving one group of Americans behind.

Older Americans. By the 1930s, more than half of elderly Americans are living in poverty.

Erika Beras (0:35)

The problem became particularly acute with the Great Depression. People were calling on the government for help, so President Franklin D. Roosevelt launched the way to give older Americans money every month until they died.

Social Security.

Jeff Guo (0:51)

Social Security.

SPEAKER_3 (0:53)

This Social Security measure gives at least some protection to 30 millions of our citizens.

Jeff Guo (1:02)

This Social Security experiment, it worked. It really, really worked. It rescued lots of older people from extreme poverty. And to this day, it is one of our most popular government programs.

Erika Beras (1:14)

You probably know how it works. We all have a worker ID for our entire lives, our Social Security number. Every paycheck, we pay a tax that goes into the Social Security Trust Fund. Then pretty much immediately, that money that we paid in goes out to retired people, Social Security recipients. And then when we get older and retire, we become those recipients while the younger workers keep paying into the program.

Jeff Guo (1:39)

But for the last half of its life, Social Security has kind of been in trouble.

SPEAKER_3 (1:44)

Social Security has been running cash deficits.

Jeff Guo (1:47)

For years, academics and think tankers and journalists and government actuaries have been sounding the alarm.

SPEAKER_4 (1:53)

Still, the alarm bells are being raised about the long-term viability.

Kathleen Romig (1:57)

And I know we've been hearing this for years.

Jeff Guo (1:59)

The agency continues to face significant financing issues.

Erika Beras (2:03)

And if you feel like you've heard this before, this right now is for real for real troubles. Very soon, Social Security will actually not have enough money to make full payments to retirees.

And the state of doom? It is as soon as 2032, just six years from now.

Jeff Guo (2:20)

And that is largely because of the baby boomers. The boomers are retiring, they are collecting their Social Security payments, and facing a much higher life expectancy than the architects of Social Security imagined nearly a century ago. And there are a lot of them.

Erika Beras (2:36)

One of those retired boomers is Steve Goss, a guy who used to work for the Social Security Administration himself. He started when he got out of graduate school. He studied math 53 years ago.

Steve Goss (2:48)

There was a listing for Social Security Administration. They said actuary, and I asked the obvious guy, I said, what's an actuary?

Erika Beras (2:55)

Ah, same question I asked.

Jeff Guo (2:56)

As it turned out, an actuary was the person who does the math for the administration. And Steve ended up doing that math for 52 years. The last half of those, he was chief actuary. And right now, Steve says, the math, it is not mathing.

Steve Goss (3:12)

Social Security is spending more on benefits now than it is taking in in revenue.

Erika Beras (3:17)

That seems like a problem.

Steve Goss (3:19)

That is definitely a problem.

Erika Beras (3:21)

Think of Social Security as like a checking account. You need at least as much money going in as going out. When there's more money coming in than going out, like from all the money boomers paid in when they were working, that money sits in what's basically a savings account, the Social Security Trust Fund, to be used if and when we don't have enough to pay retirees.

Steve Goss (3:44)

The Trust Fund is intended to be a bit of a cushion so that if we do hit a recession, we'll have money to tap into.

Erika Beras (3:52)

And duh, we did hit a recession.

Steve Goss (3:54)

So we've been tapping into the Trust Fund Reserve since 2010

Erika Beras (3:58)

Oh my goodness, we're on borrowed time.

Steve Goss (4:01)

We are, so we've got 16 years now, we've been tapping in to the Trust Fund Reserve, and we've got a few more years available, but it's time that we have to really get moving on, making changes to adjust the system.

Jeff Guo (4:12)

And if we don't, in six years, payments to retirees could be cut by 22%.

Erika Beras (4:18)

22%, that is huge. These are people who are older, who might not have other income, and need to pay for food and medical expenses and housing.