Article - Social Security to See Payout Exceed Pay-In This Year - NYT

Ran across this article in yesterday's New York Times - our Social Security program for the FIRST TIME EVER will pay out more this year than it is taking in from tax revenue, a threshold it wasn't expected to cross until 2016. The real estate bubble bursting, recent market downturn, and high unemployment rate (causing more to file for early payments) have been the main cause for the accelerated spend down of the Social Security Trust Fund.

Here's a quote directly from Alan Greenspan on how we can "fix" our Social Security System...

Only three choices: raise taxes, lower benefits or bail out the program by tapping general revenue.

I've included some of the key details from the article below and a complete link at the bottom - this is information your clients/prospects need to be aware of!

The bursting of the real estate bubble and the ensuing recession have hurt jobs, home prices and now Social Security.

This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to theCongressional Budget Office.

Analysts have long tried to predict the year when Social Security would pay out more than it took in because they view it as a tipping point — the first step of a long, slow march to insolvency, unless Congress strengthens the program’s finances.

“When the level of the trust fund gets to zero, you have to cut benefits,” Alan Greenspan, architect of the plan to rescue the Social Security program the last time it got into trouble, in the early 1980s, said on Wednesday.

Mr. Greenspan, who later became chairman of the Federal Reserve Board, said: “I think very much the same issue exists today. Because of the size of the contraction in economic activity, unless we get an immediate and sharp recovery, the revenues of the trust fund will be tracking lower for a number of years.”

Mr. Greenspan recalled in an interview that the sour economy of the late 1970s had taken the program close to insolvency when the commission he led set to work in 1982. It had no contingency reserve then, and the group had to work quickly. He said there were only three choices: raise taxes, lower benefits or bail out the program by tapping general revenue.

Link to Article