The Social security system in the country has been affected badly by the Covid-19 pandemic. Needless to say, the pandemic has also affected tens of millions of Americans, which has further damaged the system. The main problem stands that the system has been paying out more money to the retirees than it is accumulating from workers.
The way this system works is quite interesting- the current generation pays for the welfare of the previous generation. So, when it comes to your welfare, the next generation will be paying for your survival.
Social Security Trust Fund Could Cause Massive Trouble When Depleted
As it stands, this is exactly how the Social Security system has always worked. For decades, the process has been quite seamless, and without any added troubles simply because there were more workers than retirees. When the program began in 1935, there were around 150 workers for a single retiree. The money that was provided, therefore, was more than what was needed to pay benefits, which resulted in a surplus of $3 trillion which was then placed in a trust fund.
Unfortunately, the social security system is going to go through a lot of trouble in the coming years simply because the ratio of worker/retiree has shifted quite drastically over the last few decades. Currently, the pandemic has shifted the boat off the deep end by throwing tens of millions out of work. The result looks pretty bleak- three workers for a single retiree.
To cover the shortfall thus caused, the agency has been moving through the trust fund. The trustees of the organization believe that by 2033, the entire trust fund would be completely depleted.
This implies that every retiree will effectively be suffering from Social security benefits cut of around 24% which will begin in 2033. Needless to say, this would cause immense trouble and a financial crisis for the entire country. The average monthly check currently stands at around $1,400. For most of the retirees out there, it is still a major part of their income. If the situation doesn’t get better, millions of retirees will be losing their homes and will be incapable of paying their bills.