Nearly 62 million people received Social Security benefits in November, a record high number, CNS News reported. The growing number of recipients comes at a time when the government continues to struggle with funding Social Security.
Among the 61,859,250 beneficiaries in November are “45,439,781 retired workers and their dependents; 5,992,862 survivors of deceased workers; and 10,426,607 disabled workers and their dependents,” CNS News’ Terry Jeffrey reported.
Even though the unemployment rate appears to be falling, payroll taxes are no longer enough to fund Social Security.
CNS News contrasted the number of full-time workers with the number of people receiving Social Security benefits. The Bureau of Labor Statistics reported there were 126,827,000 full-time workers in the U.S., an amount that equals “only 2.05 full-time workers for each person receiving Social Security.” Unemployment is at 4.1 percent, according to reports.
Aren’t payroll taxes paying for Social Security?
Payroll taxes support the two main Social Security programs, Old Age and Survivors Insurance and Disability Insurance. But payroll taxes are no longer enough to sustain it, according to a report by the Social Security board of trustees, CNS News reported.
Payroll taxes are not the only factor. The government dips into the Social Security fund and then pays the money back to itself, plus interest. Without interest factored in, the program operates in the red.
CNS News explained:
In their 2017 report, the Social Security board of trustees puts it this way: “The Department of the Treasury invests trust fund reserves in interest-bearing securities issued by the U.S. Government.”
Without the “interest” the government pays itself back on the money it has already spent from previous Social Security surpluses, the Social Security program would not have enough money now to pay all the current benefits it owes.
“However, when interest income is excluded,” the trustee report stated, “Social Security’s cost is projected to exceed its non-interest income throughout the projection period, as it has since 2010. For 2016, cost for the year exceeded non-interest income by $53 billion. For 2017, total income for the program is projected to exceed cost for the year by $59 billion, and non-interest income is projected to be $27 billion less than program cost for the year.”
The trustees’ report estimated that the Social Security program faces a $12.5 trillion shortfall over the next 75 years.
What about cost-of-living increases?
Social Security recipients are set to receive a “raise” in 2018, when a 2 percent cost of living allowance kicks in — it will be the largest increase in six years, according to the Motley Fool. Three of the past eight years saw no increase in COLA. In 2017, there was the smallest COLA increase in history, 0.3 percent.
However, not all beneficiaries will receive the COLA increase. The reason is a Medicare “hold harmless” clause that prevents Part B premiums from increasing faster than the Social Security COLA.
The Motley Fool explains: “However, with Part B premiums static in 2018, those folks who’ve been paying less than the standard $134 monthly premium for Part B are going to need to ‘catch up.’ This could lead to a majority of folks not seeing a dime of their Social Security raise in 2018.”
What can be done?
Options for continuing Social Security include raising taxes, cutting benefits, or finding the money elsewhere, according to the trustees report.
Social Security has long been a hot-button issue. Those who oppose the program argue that people need to save their own money for retirement. Others say that since they paid into Social Security, they are entitled to receive money from it.