Retiring baby boomers could drain Social Security fund
The droves of baby boomers leaving the workforce aren’t being replaced – at least not quickly enough to keep Social Security in the black. Since 2010, the two funds managed by the Social Security Administration – one for retirees, their dependents and the dependents of deceased workers, and the other for the disabled and their dependents – have spent more than they have received in taxes, according to the administration’s 2013 annual report.
The combined funds are expected to grow until 2020 because of the interest earned off the surplus accrued over the years the baby boomers – those born between 1946 and 1964 – paid into the system. But as more baby boomers retire – the oldest boomers started turning 65 at a rate of about 10,000 a day in 2011– income into the funds won’t be able to keep up with the payments going out. The surplus is projected to be gone by 2033, as the oldest baby boomers turn 87, according to the report, and Social Security will only be able to pay out 77 percent of the benefits promised.
“For boomers, the biggest problem is a lot of their savings will be exhausted then and they’ll be more dependent on Social Security,” said Ryan Gruenenfelder, manager of advocacy and outreach for AARP Illinois. At the beginning of 2012, the average monthly benefit for a retired worker was $1,230. For one in three seniors, Social Security is almost all of their income, and for two in three, it is more than half their income, according to the nonprofit National Academy of Social Insurance.
Many baby boomers are even less prepared than retirees who came before them, Gruenenfelder said. “For boomers, the biggest problem is a lot of their savings will be exhausted then and they’ll be more dependent on Social Security,” said Ryan Gruenenfelder, manager of advocacy and outreach for AARP Illinois. At the beginning of 2012, the average monthly benefit for a retired worker was $1,230. For one in three seniors, Social Security is almost all of their income, and for two in three, it is more than half their income, according to the nonprofit National Academy of Social Insurance.
Many baby boomers are even less prepared than retirees who came before them, Gruenenfelder said. Read more…