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Encore: Social Security needs more money or benefits will be cut

The 2017 Social Security Trustees Report repeats the drumbeat that the program faces a deficit equal to 2.83% of payroll over the next 75 years and that its trust fund is scheduled for exhaustion in the early 2030s.

The 75-year deficit is the result of a constant tax rate and increasing costs. The increase in costs is driven by the demographics, specifically the drop in the total fertility rate after the baby-boom period. The combined effects of a slow-growing labor force and the retirement of baby boomers reduce the ratio of workers to retirees from 3:1 to 2:1 and raise costs commensurately (see figure below).

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