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If you plan to rely only on your social security check for retirement, you may want to reconsider. Here's why.
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Find out why key support for benefits will weaken over time.

Social security card integrated into the coins.(Photo: Getty Images)

Social security provides Americans with the retirement and disability benefits they need to make ends meet. Still, the program is going through a financial crisis, and many people are reporting a potential disaster over the next 16 years if lawmakers can not make the necessary reforms to the program.

Social security gets most of its funding from the payroll taxes workers have withheld from their paychecks. In 2017, these taxes totaled $ 874 billion out of the approximately $ 1 trillion in revenue that went into paying benefits. Yet, the interest on money that social security has saved in its trust funds has provided a vital supplement to the payroll tax revenues. Without this interest, the demographic pressures created by the retirement of baby boomers would have already reduced trust fund balances in recent years.

A key problem for social security is that the interest generated by trust funds has been declining for some time:

After climbing in the 1990s and 2000s, interest peaked at $ 118.35 billion in 2009. Since then, the number has dropped dramatically, rising to $ 85.12 billion in 2017.

Two factors have put social security on the right track to see more and more reduced interest income. Although trust fund balances continued to increase in the early 2010s, the decline in interest rates put pressure on the special investments that social security trust funds have made to generate funds. income. Now rates start to rise, but more retirees will force the trust funds to spend the capital starting this year to pay the benefits. As the total balance of the trust fund decreases, there will be less money to generate interest income.

Policymakers have known for a long time that this downward spiral was about to happen. Now that it is here, it is more important than ever for lawmakers to act if they want to preserve social security for future generations.

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