There is the very real concern that Social Security Benefits may not pay out for millions of baby boomers expected to retire. It is a horrible turn of luck that after four decades of economic growth and prosperity, a sharp reversal in the markets destroyed about one quarter of America’s investment wealth. Reduced revenue from taxes and efforts to stimulate the economy racked up a nasty debt in only a few years.
Had the economic downturn not occurred, the budget may not have ever been overdrawn, and the creaking system would still have enough steam to keep puffing; but thanks to the debt and an uncertain future economy, there is the chance that retirees will only gain a fraction of what they paid in taxes. Money still exists, and the government is already raising taxes to pay for everything, but in all likelihood, payments will be smaller and will apply to fewer. Social Security Benefits have outstripped projections by a wide margin, and may continue to do so.
Although Congress has been taxing salaries for years, it has also been borrowing from the Social Security Benefits funds in order to pay for other programs. This politically motivated borrowing is one reason why the government is broke. They face pressure from angry taxpayers, so new revenue may be hard to obtain. Future retirees will depend more on their own saving, especially for the first few years. Some will depend entirely on retirement homes and social services. Social Security Benefits will still be around, but may not be as generous as baby boomers were raised to believe. Being frugal now can be a matter of survival.