RALEIGH, N.C. (WPTF) — Just a few decades ago, baby boomers were the financial engine powering the U.S. Social Security system. Now, as that generation retires in waves, the very program they sustained is running on fumes.
CBS News Business Analyst Jill Schlesinger says the social security board of trustees said they have a big financial problem with the system.
CBS News Business Analyst Jill Schlesinger | RSS.com
“To be clear, we have a system where the number of people working right now pay benefits out to the people who are retiring,” Schlesinger explained. “For many years while those baby boomers were working, there were so many of them we built up extra money in the system—that was called the surplus. Now that all those baby boomers are retiring, that surplus is disappearing.”
That disappearing cushion spells trouble. According to the Social Security Board of Trustees, the program could start falling short as soon as 2033—just eight years away. If Congress fails to act, automatic benefit cuts could go into effect, reducing monthly payouts by roughly 25%.
“This is really important gang, I know it seems like ‘oh it’s so far off’ and for many years it did feel far off but now we have seven or eight years to basically say to congress ‘hey, fix the system,’” said Schlesinger.
Schlesinger says she knows it sounds very polisci 101 of her to say, but people need to use their voice to make a change here. If these benefits are cut, people may need to potentially change how they live. In this case, the sky is really about to fall and we need to fix it as the clock is ticking.
“Political pressure will make this go to the front-burner, right now it’s on the back-burner,” said Schlesinger. “If you’re a legislator, you don’t want to be the one who’s like ‘oh yeah we raised social security taxes, oh yeah.’ In order to fix the system, which we should have done years and years ago, now we are forced to do it. You know when you have to do that? When everyone says ‘we’ll boot you out of office unless you do it.’”
Schlesinger urges Americans to get informed and get involved.
“You personally should go to SSA.gov, make sure you’ve created an account there, and look at your projected benefits. If you really want to be on top of this you would look at these benefits and you would say ‘hey, what would happen if I had a 20-to-25% reduction of these benefits. Oh my goodness, maybe I don’t want to put in a new bathroom, maybe I want to put a little extra money in my 401k’,” said Schlesinger
With time running out, experts say the future of Social Security now depends on both legislative action and public pressure. Without both, a system once seen as a safety net may soon come up short.