Without reforms, U.S. retirees to face dwindling funds
By Rachelle Younglai and Glenn Somerville
WASHINGTON (Reuters) - Aging baby boomers got some jolting news on Monday when the U.S. government said the Social Security retirement program is on track to go bankrupt three years earlier than expected if reforms are not made.
Unless Washington politicians, who have been at war with each other over government spending priorities and federal budget deficits, can decide how to put Social Security on a sound footing, retirees' pension checks would start running out in 2033, according to an annual report.
The baby boomers - those 78 million Americans born between 1946 and 1964 - started retiring last year. With 10,000 of them expected to retire every day for the next 19 years, according to the Pew Research Center, they will increasingly strain Social Security.
"Never since the 1983 reforms have we come as close to the point of trust-fund depletion as we are right now," trustee Charles Blahous told reporters. "Our window for dealing with it without substantially disruptive consequences is closing very rapidly," he said.
Meanwhile, the Medicare healthcare fund for the elderly is still is headed for exhaustion in 2024, the same date estimated last year. But it was uncertain whether the assumptions used in arriving at the estimate were overly optimistic.
Blahous and fellow trustee Robert Reischauer said lawmakers should be aware that it will become increasingly difficult to "avoid adverse effects" on retirees or those close to retirement if legislative changes are delayed much longer.
For example, Americans' average real earnings are forecast to grow more slowly than previously thought, crimping revenue from the taxes that pay for the benefits, the report noted.
Even when the fund starts to run out of money in 2033, it would be able to pay 75 percent of benefits. An alternative, in order to keep payments at 100 percent, would be to raise the payroll tax on employers and employees to 16.7 percent from its regular 12.4 percent rate. Continued...