Social Security Beneficiaries Rise by 19%
According to Bloomberg News, the number of Social Security beneficiaries increased by 19 percent, or 2.6 million retired workers, in FY 2009. This increase was almost 50 percent more than expected. In FY 2008 only 2.1 million new retirees entered as beneficiaries of Social Security. In addition, the number of disabled workers receiving first-time benefits increased by 1 million this past year.
Because of this, Social Security's finances are being hit from both ends. More beneficiaries means greater outlays -- at least over the next few years. And higher unemployment, along with lower wages, means less revenue is coming in from payroll taxes. (See our blog post earlier this week on the economy's effect on Social Security)
As a result, in August, Social Security paid out $6 billion more than it took in from payroll taxes -- and it is projected to run deficits for 2010 and 2011 (see our previous post about the projections for Social Security here).
|Social Security Surplusses/Deficits (CBO)||18||-10||-9||8||18||17||9||-6||-23||-41|
Earlier retirement can also hurt beneficiaries, over the long-run, since early retirees are penalized with lower benefits. Meanwhile, the system as a whole is on an unsustainable path, with permant deficits projected to set in by 2016, and trust fund exhaustion estimated to occur by 2037.
The Center on Budget and Policy Priorities projects that Social Security will account for 4.8 percent of GDP in 2010, making it the largest of all the entitlement programs. Without efforts to close the system's shortfalls in the coming years, through benefit reductions, revenue increases, and/or a change in eligibility requirements, deficits in the trust fund will further deteriorate America’s already weak fiscal outlook.