The president and supporters of privatization of Social Security have deemed the program to be in a crisis, stating emphatically that the system will “collapse” and be “bankrupt” for workers in their 20s and 30s and thus, should not expect to receive benefits when they retire.   This rhetoric is based in part on privatization advocates’ efforts to exploit current misperceptions about Social Security among younger workers. 

The fact is, Social Security is in good health and will be able to pay full benefits for the next several decades.  Moreover, rhetoric about the Trust Fund being filled with nothing but IOUs undermines the well-deserved reputation and strength of the government’s Treasury Bonds, which are the same instruments that the government issues when they borrow for general federal spending. 

Social Security will be able to pay full benefits until 2042 according to the most conservative estimates by the trustees of the Social Security Trust Fund.  Using more moderate assumptions about the economic future of the country, the Congressional Budget Office forecasts the Trust Fund’s ability to pay full benefits to last until 2052.

According to the trustees and actuaries of the Social Security program, the Trust Fund has assets that currently total $1.7 trillion in the bank and took in $170 billion more than it paid out in 2004.  By the year 2018, the Social Security Trust Fund will have about $5.3 trillion. Nine years later (2027) the Trust Fund will have assets projected to be around $6.6 trillion.   

The trustees predict that 2042 is the date when we should expect those trust fund assets to be depleted, but the system will continue to be able to pay benefits that are about 75 percent of what is currently promised.  By working in a bipartisan manner now, we can fix the system to guarantee that the Trust Fund is not depleted and future beneficiaries can still count on Social Security as insurance against poverty.

It is true that when the system was founded, there were more workers contributing a portion of payroll for every beneficiary than there is today; and that the ratio has been reduced by demographic changes over time.  In 1950, the ratio was 16 workers to one beneficiary.  Today, for every retiree, there are 3.3 workers paying into the system; but these three and a third workers are also much more productive, earning more and contributing more to the national gross domestic product than did the 16 workers of prior decades.  And productivity is forecast to increase over 70 percent per worker over the same period as the demographics shift to 2.2 workers per retiree.

It says a lot about the integrity of the program that in the last 70 years since Social Security was enacted, Congress and the American people have managed to keep the program running successfully despite this massive demographic change.  If the demographic ratios change further and demand that we act again, I am confident that we will find solutions to the current concerns, without drastically changing the system and putting the well-being of retirees, survivors and people with disabilities at further risk.

The truth is that the predictions about the insolvency of Social Security are estimations, based on assumptions that may or may not be true over time.  Differing assumptions are why CBO forecasts 2052 as the year the Trust Fund runs out of money and the trustees say it is 2042.   These are complicated measurements, and a shift in one assumption can change the entire equation.  Serious analysts, like the SSA’s actuaries and the Congressional Budget Office, take care not to use contradictory assumptions in their forecast models.  Unlike privatization proponents, serious analysts would not use contradictory assumptions – e.g., the stock market will grow at 6.5 to seven percent per year, while at the same time the economy will grow only 1.9 percent per year  respectively to predict greater returns from private accounts and the insolvency of Social Security in 2042.