The current economy has brought many changes to personal, business and government financial standings and now is showing effects on Social Security payouts as well. This year Social Security will have a flip in it’s financial balances, as it will begin paying out more in benefits than receiving in payroll taxes.
With the poor economic status many jobs have disappeared having 2 large effects on Social Security taxes collected. With jobs disappearing, many people applied for the benefits sooner than they had planned, as well as without as many people currently employed there are less paychecks to tax.
With the US debt rising and less taxes being collected due to unemployment it raises concern. By law, Social Security cannot pay out more than it’s balance in any year given. The often referred to “trust fund” that Social Security has serves as a way to track pay-as-you-go revenue and outlays over time, the “balance” is actually a history of its vast cash flows (a total of all past revenue minus outlays). In a year such as this, the “paper gains” from the interest earned on the securities will more than cover the difference between what it takes in and pays out.
Projections show the effects of the recession easing in the next few years with possible small surpluses reappearing in 2014 and 2015. In the following years as the baby boomers leave the work force, and start collecting rather than contributing, outlays will exceed revenue every year regardless of the economic status.

Solutions to this problem are few including raising taxes, lowering benefits, or pulling funds for general revenue.

LeadPile hopes to see bigger and better things with the economy in the future months coming!