👴🏻Social Security is running out fast
🛡️Social Security is the government pension system that was created by F.D.R. during the Great Depression as part of his "New Deal". Unfortunately, the "New Deal" is starting to look a lot like a scheme Charles Ponzi would be proud of.
It used to be a very safe asset, but between LBJ's '68 Unified Budget (think Vietnam war) and Greenspan's '83 Budget Reform (when the surplus started getting too big), Congress decided to do what it does best, "spend it"💸.
📉Well, a few weeks ago, the CBO (Congressional Budget Office) said that we might run out as soon as 2032. Here are the "deets":
What the CBO Said:
They said that the SSA Trust Fund (holds the money) may run out by 2032. The amount being spent out of the Trust Fund looks like it's growing from $1.5T to more than $2.5T by 2036. And after accounting for taxes and interest, the shortfall will grow from $207B to $525B in 2032, when the fund hits zero.
💸 What does "Running Out" mean?
When then say "it's running out" they don't mean "poof" gone.
What they really mean is that the amount of money that is paying into the system will only cover 77 cents on every dollar going out (i.e. not enough young people to pay for the Boomer Pension Dream.)
In other words, soon Social Security is living paycheck-to-paycheck.
🧨 Things that sped this up.
↳ 🏛️Congress passed the One Big Beautiful Bill Act in 2025, which didn't help with our debt.
↳ 🌎Immigration fell last year to 1.3 million people, down from 2.8 million the year before. Bad news for Social Security, since immigrants (including unauthorized ones) are net contributors to the program.
↳ 💰The CBO projects a COLA (cost of living adjustment) of 3.1% for 2027. Higher inflation means bigger social security payments, which drains the trust fund even faster.
🏛️ What Congress will have to do, eventually...
↳ 📈Raise the payroll tax rate (currently 6.2% each for employers and employees, hasn't moved since the 90s).
↳👴🏻Means testing. Does Warren Buffet and Ray Dalio really need their Social Security?
↳🏝️ Raise the retirement age above 67.
None are great choices. All cause pain to retirees. All are non-starters at the ballot box.
But don't worry, Congress will do what it does best. Wait until they are out of office and let the new Congress people can clean up their mess.