Social Security Squeezed by Flood of Retirees

New figures show that the Social Security trust fund’s annual surplus was all but exhausted in 2009 as the recession steered hundreds of thousands of workers to retirement or claiming disability. The Congressional Budget Office had projected some time ago that it would operate in the red during 2010 and 2011, but the steeper economic downslide suggests that losses will be even greater than anticipated.

“Things are a little bit worse than had been expected,” said Social Security Administration Chief Actuary Stephen Goss. “Clearly, we’re going to be negative for a year or two.”

A look at some of the specific numbers makes clear the gravity of the deficit. In 2009, more than 2.7 million joined the giant retirement program, which was nearly half a million more than those who had enrolled in 2008. And 2008 had been considered a “busy” year of growth for the program before the 2009 figures were released. This brought the total number to more than 52 million, or one in every six Americans, who received Social Security benefits in 2009.

In 2008, Social Security received $63 billion more in taxes than it paid out in benefits. Last year, it collected only $3 billion more than it spent. The massive slide is attributed to both the spike in retired workers collecting benefits or disability, and an end of growth in payroll tax revenue, which before 2009 had been keeping pace with 4.5 percent average annual wage increases.

Sixty-five years ago, there were 40 workers paying into the Social Security program for every beneficiary that drew from it. That figure has fallen sharply to just over three workers to support each recipient.

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Tags: Social Security

Category: Baby Boomers, Retirement