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The Motley Fool fool.com 05 Aug, 2022 09:45 am

The 2 Biggest Social Security Problems No One Is Talking About

The 2 Biggest Social Security Problems No One Is Talking About
Baby boomers retiring and cost-of-living adjustments (COLA) not keeping up with inflation only tell half the story of what's wrong with Social Security.

Social Security is vital to the financial well-being of our nation's retired workers, as well as millions of workers with disabilities and the survivors of deceased workers.5 million people are pulled out of poverty each year as a result of Social Security payments.What's more, the poverty rate for aged Americans sits at 9% because of Social Security's existence, as opposed to an estimated 38% without the program.Yet as amazing as this program has been for more than eight decades, Social Security is rife with issues.

The latest annual report from the Social Security Board of Trustees projects that the Old-Age and Survivors Insurance Trust, which is what provides monthly benefits to retired workers and survivors, is on pace to deplete its asset reserves -- the excess revenue built up since inception -- by 2034.Although Social Security and the OASI are in no danger of insolvency or going bankrupt, failing to fix this capital shortfall could result in retired worker and survivor benefits being cut by an estimated 23% in 12 years.

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