Social Security at the Tipping Point
2018 brought with it what The Motley Fool’s Sean Williams refers to as an “undesirable inflection point”–a term used to describe a turning point in the historical progress associated with Social Security. Here at the AMAC Foundation, our Social Security Advisory staff uses the term “tipping point” to describe the condition cited by Williams in his post on www.fool.com (access it here). Put simply, beginning this year for the first time in decades, Social Security is destined to pay out more than it brings in. The result? The beginning of a draw-down on the Trust Fund reserves that have been accumulating through the years.
As Williams points out in his article, the Social Security Trust Fund reserves peaked at just under $2.9 trillion at the end of 2017, with a large portion of incoming revenue attributable to the program’s investments in special-issue Treasury bonds. In fact, these investments–required by law–net Social Security a fairly substantial income. In 2017, interest on these bonds netted the program roughly $85 billion, although now that the tipping point has been reached, this figure going forward will gradually diminish. At the same time, the gap between revenue coming into the program and benefits being paid out will continue to widen. This is the cause of what’s described as Social Security’s solvency dilemma.
Williams’ explanation of Social Security’s interest income stream helps explain how the program can continue paying scheduled benefits between now and 2034, the year the Trust Funds are expected to be fully depleted. The reality that remains, however, is the looming across-the-board benefit reduction that would result from the absence of action to correct Social Security’s long-term problems. There are several reform proposals on the books, but congressional inaction has caused any movement on them to languish. The Association of Mature American Citizens (AMAC) is one of the organizations aggressively advocating for a solution to the solvency issue, having crafted a legislative framework that would preserve Social Security for future generation. AMAC’s proposal would accomplish this without raising taxes, and would guarantee benefits for all current and future recipients. Learn more about AMAC’s proposal here…
This posting is presented for informational purposes only and does not represent legal or financial guidance. Any opinions or interpretations presented are either those of the original author or, in the case of articles authored by the AMAC Foundation, are the opinions of AMAC Foundation staff, originally trained and accredited by the National Social Security Association (NSSA) and certified via the AMAC Foundation. Any links included in the article are valid on the posted date; socialsecurityreport.org cannot guarantee the duration of the links’ validity. NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (https://amacfoundation.org/services/) or email us at ssadvisor@amacfoundation.org. Because we are a non-profit organization, there is no charge for these services.