Not OK, boomers: Why your future Social Security benefits may be much less than promised

Before Congress spends more time and money on other priorities, lawmakers need to turn their attention to the stability of Social Security.

It has been nearly 40 years since Congress found common ground on corrective action for the system's finances, and those figures have deteriorated ever since.

This issue really can’t wait anymore. Continued delay not only threatens the future of people working today; it puts the security of those well into retirement in jeopardy.

At this point, the average voter hears that the experts at the Social Security Administration believe that Social Security is fine until 2035, at which point incoming revenues will be sufficient to cover only about 75% of scheduled benefits.

Inexplicably, voters seem satisfied with that prospect. Elections come and go without candidates making any firm commitment to the program.

The hard truth is that we do not know much about the future of Social Security. The latest numbers are based on the pre-COVID economy, in which jobs were plentiful, fertility rates were expected to rise and interest rates promised to deliver growing levels of interest revenue for nearly a decade. More than a year later, it is little more than a glimpse into what might have been.

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In the coming weeks, the Social Security Administration's trustees will shed more light on how the system fared during the pandemic and beyond. The key aspect of the report will look at how the program will digest the inflation rates projected to be the highest in decades. In contrast, last year, the actuaries released an interim set of assumptions that forecast inflation would fall to 1.65% in 2021.

No guarantees for retirees

The key takeaway from that report for all Americans is that 2035 is not a guarantee, much less a worst-case scenario. Instead, it represents a stern warning about what might happen even in a relatively robust economy. Mind you, 14 years is not a long time in terms of a pension. It is about the life expectancy of someone 73 today.

In response to these unsettling prospects, pundits and policymakers assure voters that the situation is manageable, stemming from well-known demographic trends. To state the obvious, if the financial imbalances of Social Security were manageable, they would not be growing. The fact is that over the past 20 years, the unfunded liabilities have grown at more than double the rate of the economy.

In other words, the hole in this vital program’s finances is growing at more than twice the rate of our ability to fill it.

There is no denying that the number of workers and retirees presents a serious challenge for those working to shape the system's future. At the same time, the change in the population profile does not begin to explain the over-decline in the system prospects. In the past five years, the difference between the system's ability to promise and its ability to pay has grown by more than 50%.

Gap in funding is growing

Congressional inaction represents a growing part of the imbalance. Last year, the system generated $600 billion in unfunded liabilities solely because we moved the valuation date forward by one year. This is the cost of doing nothing.

According to the Social Security Administration, inaction over time accounts for nearly two-thirds of the gaps in the program's finances. And these costs will increase each year, making the situation less and less palatable to the voting public. The passage of time is a cancer to Social Security.

Congress really doesn't have the option to ignore the system. As it is, people born in 1960 face substantial benefit reductions that will last a lifetime. The issue stems from the way Social Security integrates average wages into the benefit calculation. These depleted checks will start mailing in less than six months.

This issue can’t wait because the one thing everyone agrees on is that the longer we wait, the harder it gets to find solutions.

Brenton Smith writes nationally on the issue of Social Security reform.

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This article originally appeared on USA TODAY: Why your future Social Security payments may be less than you think