4 Reasons Social Security May Fail Tax-Paying Americans Within 5 Years: It is expected that the Old Age and Survivors Insurance (OASI) Trust Fund will run out of money within the next decade, which has caused a lot of anxiety over Social Security’s future.
As a result, Social Security will be reliant solely on payroll taxes, which currently fund 77% of benefits. However, several threats could also affect the program long before then.
The Social Security Administration has been hit by a variety of problems in recent years, ranging from an overpayment scandal to threats of benefit cuts from certain lawmakers.
These problems could spell bad news for Americans who have paid taxes into the program.
4 Reasons Social Security May Fail Tax-Paying Americans Within 5 Years:
There are four reasons Social Security could fail in the next five years.
Payments in excess
As of late last year, the SSA had distributed over $23 billion in overpayments — and it has been working to contact recipients to get them to repay them. The situation caused widespread confusion and anger over why it happened and how the SSA handled things and led to the SSA being in front of Congress.
In the end, taxpayers will have to pay back thousands of dollars in overpayments, even if they were not responsible. Additionally, taxpayers will be on the hook for fixing the problem and preventing it from happening again.
Shortages of staff
The nation’s largest federal employee union said last year that the SSA is in a “crisis” due to underfunding and staff shortages, which could lead to even greater delays in distributing benefits. Although the number of beneficiaries continues to grow at the SSA, staffing levels are at a 25-year low, as GOBankingRates previously reported.
In fact, in 2023 alone, the number of beneficiaries is expected to increase by 25%. The SSA is already experiencing long wait times for beneficiaries (and taxpayers) seeking customer service help.
Retirement boomers
Because so many baby boomers contributed to the OASI fund when they were working, the SSA was able to build it up in the first place.
The program now misses out on the taxes boomers pay into it, but also must start paying their benefits since many, if not most, of them have retired and begun collecting Social Security.
The immigration gap could be filled by immigrants, but…
Immigrants are younger than American-born workers on average and are already a major contributor to the country’s population growth, so they can fill out the ranks of working-age Americans.
Social Security, however, is missing a vital revenue source in the near term because many lawmakers favor reducing immigration rather than increasing it.
