Why the Social Security Shortfall Is Coming Sooner

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Alex Ossola (0:33)

President Trump says the US must respond after Iran downed a US Apache helicopter near the Strait of Hormuz. Plus, the fund that helps pay for Social Security benefits is now expected to run out even earlier. And Anthropic releases its latest AI model, giving the public access to a tool that has spooked companies and the White House.

Bob McMillan (0:52)

Anthropic announced this new technology and then they said, It's too dangerous to be released publicly. Naturally, that's going to get everybody's attention.

Alex Ossola (1:00)

The company says this model protects against those dangerous capabilities. It's Tuesday, June 9th. I'm Alex Ossola for The Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

President Trump has accused Iran of shooting down a US Apache helicopter near the Strait of Hormuz and says the US must respond. The development threatens to shatter a fragile ceasefire between Iran and the US. The downing of a helicopter late yesterday set off a race to find the two American crew members before Iranian forces could close in on them. The military says that, in a first-of-its-kind operation at sea, a drone boat rescued the crew, who had spent two hours in the water off the coast of Oman. Iran didn't deny that it shot down the helicopter, but the country's foreign minister suggested that taking it down had been an accident.

And NASA has chosen four astronauts for its next Artemis mission as it prepares for a moon landing in 2028 There is mission commander Randy Bresnik, a retired Marine Corps colonel who became a NASA astronaut in 2004 Also coming on the mission are Andre Douglas, who served in the Coast Guard as a naval architect, Frank Rubio, who once spent more than a year aboard the International Space Station, and Luca Parmitano, who's representing the European Space Agency. Artemis III won't take them to the moon or around it as the previous flight did. Instead, it will test hardware and vehicles that NASA intends to use for the eventual moon landing. Their flight is expected to launch next year. It will spend about two weeks in low Earth orbit.

If you're American, you may already know that the fund that pays out Social Security is expected to be depleted within the next decade. Social Security's trustees said today that the deadline is actually coming a few months earlier than they had previously projected. Now it will be in late 2032 Anne Tergesen, who covers retirement and personal finance for the journal, says there are a few reasons why the shortfall is coming earlier.

Anne Tergesen (3:00)

The tax cuts that Congress passed last year means that a lot of Social Security beneficiaries are not paying as much tax on their Social Security benefits. And so that tax revenue is declining. And both fertility rates are declining and also immigration. Those declines mean that they're projecting fewer numbers of workers who are going to be paying into the system in the future. And that means less revenue for the Social Security trust funds.

Alex Ossola (3:32)

But Anne says there's no need to panic quite yet that the fund only pays for a portion of the overall Social Security benefits.

Anne Tergesen (3:39)

The payroll taxes that come in don't cover 100% of the benefits that have been promised. We have to draw down on the trust fund, which is like a savings account that Social Security has amassed. That trust fund will be depleted at some point in 2032

People who are receiving benefits are still going to get their benefits. In a worst case scenario, they're going to get about 78% of their promised benefits because that's what the payroll tax will cover. There will be no Social Security trust fund to make up the difference. That is one source of serious alarm for people, is that when they hear that the trust fund is going to be depleted, they think that all of their benefits are going to go away and that's not the case. I think Congress is likely to come up with some kind of funding system to avert a situation in which 22% of Social Security benefits just disappear overnight. It's important for people to try to take a long run perspective and try not to panic about this.