The Social Security Trust Fund just suffered its first annual decline since Congress shored up the retirement program in 1983.
The unexpected $3 billion decline is an indication of the precarious state of Social Security's finances. Since 2010, the program has been paying out more in benefits than it gets in tax revenue, but the trust fund, which earns about $95 billion a year in interest, had kept growing, though a little less each year.
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Now that period of relative stability in the trust fund is almost past, without any effort in Washington to secure a stable future for Social Security.
Last year's trust fund decline doesn't mean that Social Security's finances just got even worse; the trust fund would have seen another modest gain if not for a nearly $26 billion early payment of benefits that usually fall in January. The problem is that program finances are a disaster waiting to happen.
The trust fund's nearly $2.8 trillion in special-issue Treasury securities represent a promise that the government will borrow what it needs to keep paying all benefits until the promissory notes — IOUs — are depleted or Congress changes the law. But that day of reckoning is fast approaching. Social Security's cash shortfall is expected to rapidly escalate from $74 billion a year to $361 billion in 2025 alone, the Congressional Budget Office projects. Under current policies, the CBO says the trust fund will be gone by 2029.HERE.
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