This is the second part of a two part series.  Click here to read Social Security, Fact or Fiction, Part 1.

HE SAYS:

I am not suggesting that we have nothing to worry about when it comes to the future of Social Security, but, we do need to separate fact from fiction.   Part of the problem is that Social Security was not intended to be all things for all people.

Myth #4: Social Security will run out of money in 2042.   Social Security will still be receiving payroll taxes from workers in 2042; however, by then the assets in the trust fund may have been depleted.   The Social Security Administration projects the following time line:   By 2018, Social Security will begin paying out more then it collects and will need to use the interest earned on the Treasury bonds in the trust fund.   By 2028, Social Security would have to start redeeming the Treasury bonds.  By 2042 (or 2052 depending on who you talk to), Social Security would have redeemed all of the Treasury bonds and would only have enough revenue to pay out 73% – 78% of promised benefits.

Myth # 5: Social Security would not be having problems if foreigners weren’t able to claim Social Security.    Of the 53 million Social Security checks mailed each year only about 400,000 go overseas.   The real problem with the current system is demographics and add-ons.   In 1950 there were 16 workers paying into the system for every person receiving benefits; however, by 2015 it is projected that the ratio will be down to 3 to 1.    Even more of a problem is the add-ons.  When Social Security was created it was only intended to provide retirement benefits to workers.   Over the years, Social Security benefits have been extended to retirees’ dependents and survivors and to disabled workers.   If these add-ons were eliminated, it is projected that Social Security could continue to pay for itself; however, no such solution could now be politically viable.

What is not a myth is that there is a controversial list of possible reforms such as cutting benefits, raising taxes, or privatizing some or all of the system.

WHAT DO YOU SAY?