It was a good news, bad news kind of announcement.
On Thursday, trustees for the Social Security trust funds announced that the more than 61 million retirees, disabled workers, spouses and surviving children who receive Social Security benefits can expect to receive an increase in the coming year. The bad news? That increase is projected to be only 2.2 percent, or about $28 a month for the average recipient who receives $1,253 12 times a year.
The amount of the increase is pegged to inflation and we haven’t seen much of that since the Great Recession.
Still, the announcement serves as a good reminder of an important truth. Social Security is not a handout. It is independently funded by payroll taxes - taxes that we have paid into all of our lives.
But, the experts warn, that’s no guarantee for the future.
With the aging of the Baby Boomer generation, the number of people drawing on Social Security, versus those currently paying in, is shrinking. In 1960, there were 5.1 workers for each person getting Social Security benefits. Today, there are about 2.8 workers for each beneficiary. And older people are also living longer. That, of course, is a good thing but it means that the funds may run out of money unless some action is taken. Suggestions have included raising the age of eligibility, cutting benefits and/or raising contribution levels.
For better or worse, however, for the moment, making changes to support the fund is just one more item for Congress’ to-do list. Meanwhile, that legislative body is continues to struggle with the Republican pledge to “repeal and replace” the Affordable Care Act.
Social Security will just have to wait.