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  • Social Security’s in trouble.

  • The program is quickly running out of cash.

  • Millennials and younger don't believe that

  • they're going to see a penny of Social Security.

  • As a millennial, this has been my introduction

  • to Social Security.

  • It's like the government pulls some money from my paycheck

  • and then it goes into some imaginary fund

  • that maybe I'll never see again.

  • The truth is, I know embarrassingly little about this program

  • that most Americans rely on for retirement.

  • Before you go and dive into the comments, it seems

  • nobody gets it.

  • This poll looked at people near the retirement age

  • who are about to start collecting it.

  • But rather than succumb to the void like I want to,

  • I read entirely too much about it so you don't have to.

  • So what is Social Security and is it actually doomed?

  • It's really hard to

  • overstate how important Social Security is.

  • The official name of Social Security isThe

  • Old-Age, Survivors, and Disability Insurance Program.”

  • It can kind of be broken down into three parts.

  • Most people are familiar with the old-age one.

  • That's retirement.

  • It's the biggest source of income for most retirees.

  • See the chart?

  • Actually. Here's an updated one.

  • In 2022,

  • this program alone was responsible for keeping nearly 16

  • and a half million older Americans above the poverty line.

  • But it's also so important for families.

  • It supports people when a parent or a spouse dies,

  • you know, when they're still of

  • working age, it supports people if they become disabled

  • and are not able to continue

  • working and supporting their families.

  • Thus, the name.

  • Every U.S.

  • worker pays into social Security via a payroll tax.

  • Well over 90% of American workers

  • just pay 6.2% of their wages

  • out of every paycheck into Social Security,

  • and then their employers pay another 6.2%.

  • There is a cap on this tax,

  • though, as in if you make more than a certain amount of money,

  • the government's only going to tax a portion of it

  • for Social Security.

  • The cap this year is $168,600.

  • Still with me?

  • Or you sinking into the void of financial lingo?

  • Come back.

  • We're almost there.

  • Now, you can literally look at your pay stub

  • and see where the Social Security tax comes out.

  • This money goes into two trust funds

  • managed by the federal government

  • and is then used to pay out the people

  • who are currently collecting

  • typically in the form of monthly checks.

  • When you retire

  • the size of that check is determined by the average

  • of how much you've made throughout your working life ...

  • and the age you start to collect.

  • As of now, retirees can start collecting at age 62,

  • but they won't max out the benefit unless they wait

  • until they're 70.

  • So to recap, current workers pour money into trust funds,

  • and those trust funds are used to pay out

  • current beneficiaries.

  • As long as people are working.

  • This tax is being paid

  • and there will always be money in those funds.

  • So why does everybody keep saying it's being drained?

  • So the reason that Social Security

  • faces a long term financing shortfall

  • is the aging of the population.

  • In other words, boomers.

  • Here's a chart of the US population.

  • As you can see, there's a bump here.

  • That's the baby boomer generation.

  • For decades, this giant population

  • was the main workforce that paid into Social Security.

  • That means more people

  • were putting money in than taking money out.

  • So those trust funds that we talked about earlier

  • had a surplus,

  • and the US Treasury took that extra money and invested it.

  • And those investments ultimately

  • gave us a $2.9 trillion dollar reserve.

  • Then came 2021.

  • At this point, Social Security stopped operating in a surplus

  • and actually fell into a deficit

  • because more and more people started to collect.

  • We just don't have quite as many workers

  • supporting each beneficiary as we used to.

  • But it's fine right now

  • because 2.9 trillion is a nice pile of money

  • that's been supplementing the shortfall.

  • So every Social Security check

  • a beneficiary gets right now

  • is kind of made up of two things.

  • About 80% of that is the trust funds

  • that are being filled by everyone still working.

  • And about 20% is coming from that $2.9 trillion surplus.

  • And that surplus is what's predicted to run out by 2033.

  • And then after that point, about ten years from now,

  • there is some uncertainty about what will happen.

  • What won't happen is a total draining of Social Security.

  • There will always be benefits in some form.

  • It may look different

  • from the Social Security benefits that are paid now,

  • but there's really no question of whether Social Security

  • benefits will be paid for into the future.

  • What those benefits

  • look like entirely depends on

  • how Congress decides to restructure the program

  • to get over this baby boomer conundrum.

  • This episode is presented by Metro by T-Mobile.

  • This tax season.

  • Metro wants to help customers avoid wasting dollars

  • by using their tax refunds

  • to catch up on things that they want,

  • not on things they don't.

  • According to Metro, you don't take yada yada in life,

  • so don't take yada yada from a wireless provider.

  • Metro by T-Mobile has no contracts, no credit checks,

  • and no surprises.

  • Metro does not influence the editorial process of our videos,

  • but they do help make videos like this possible.

  • To learn more, you can stop by one of over

  • 6000 metro stores nationwide now.

  • Back to the video.

  • So there are a few options for restructuring the program.

  • Let's talk about the top five in a very bland

  • and unbiased way.

  • Starting with the high earners.

  • A lot of very wealthy people,

  • they don't get their money through salaries

  • like I make more in a salary

  • than Jeff Bezos does, for example.

  • And so he pays less in Social Security than I do.

  • Thanks, Jeff.

  • At least one bill is fighting

  • to add a Social Security tax to high investment income,

  • which is where a lot of rich people make and keep their money.

  • Then there's this.

  • We could remove or change that $168,000 salary cap.

  • The most popular option is to change the payroll tax cap,

  • either to get rid of it altogether

  • or to raise it so that it covers

  • more of high wage people's earnings.

  • These next two send people into a rage,

  • but they are kind of the most obvious.

  • Raising the payroll tax would immediately

  • start pumping more money into Social Security

  • and help offset the imbalance of beneficiaries and workers.

  • And cutting the amount

  • each person can actually receive

  • would balance the scales, even further.

  • But this is wildly unpopular across

  • party lines and with the public.

  • Granted, if Congress were to do nothing in

  • 2033, benefits would automatically decrease.

  • And this option.

  • You've probably heard this before.

  • It did not go over well in France.

  • Raising the full retirement

  • age is a benefit cut.

  • Full stop. For everybody.

  • It means 7% lower benefits over a lifetime on average

  • for each year that you raise the retirement age.

  • It's hard to predict exactly what Congress will do,

  • but it's very likely they'll wait until the 11th hour to do it.

  • Because nobody really likes passing a benefit

  • cut or a tax increase.

  • For today's workers, the options are not a lot of fun.

  • I mean, it's either you pay more

  • or you get less or some combination thereof,

  • no matter what choice or combination of choices is made.

  • There will be losers.

  • Of all the things we can't agree on in the US, it's clear

  • that across party lines and all

  • ages, people value Social Security.

  • One of the beauties of the Social Security program is it

  • sort of like we're all in this together, you know?

  • We're all funding these benefits,

  • we're all benefiting from them, and it's kind of a compact

  • between generations to take care of each other.

  • When we face retirement, death or disability.

Social Security’s in trouble.

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Is the US running out of Social Security?

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    林宜悉 發佈於 2024 年 03 月 22 日
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