Social Security Has Already Started To Go Away

By Douglas A. McIntyre Published Feb 20, 9:44AM EST

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Social Security Has Already Started To Go Away — © BackyardProduction / iStock via Getty Images

Social Security is supposed to run out of money in 2033 or thereabouts. Running out of money is a bit of an exaggeration. People will start to get smaller benefits, and they could get smaller and smaller by the year. Congress has the sole capacity to change this. Today, that change does not have enough to alter payment erosion.
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The CBO says the Social Security crisis could happen sooner. This insolvency would hit earlier if COLA stays high because of inflation. This year, the increase was 9%. Further inflation at over 5% would eat away at the fund rapidly. CBO Director Philip Swagel said, “I think we’ve learned as a nation that high inflation is very damaging. In a sense, like a tsunami that affects the entire nation, and in a way that other negative economic effects don’t.”

Imagine that in 2032 the 60 million people who get Social Security benefits begin to become poor. Based on the national poverty level, that is not out of the question. The ripple effects on the economy would be massive. An entire group of consumers would have far less money. Consumer spending still accounts for two-thirds of GDP.

Lower Social Security benefits will also increase the demand for low-end housing. It is impossible to build millions of units even over the course of years. If Congress doesn’t support Social Security, it will certainly not support a massive home bullying initiative. (These are America’s most at-risk housing markets.)

Lower Social Security payment will also increase the need for food stamps and other programs to financially help people who live on the fringe. This will add untold billions of dollars to the need for federal government support.
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Social Security payments are not limited to the money that goes to individual beneficiaries. It ripples through America’s financial fabric.

If Social Security funding does not happen soon, the fund has already started to go away, even if it is just at the beginning of the process. Here’s what it costs to retire comfortably in every state.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.