Understanding Social Security and Medicare flipbook 2024

16.5 1950 2.3 2035 2.7 2023 The Bottom Line Active workers per Social Security recipient Source: Social Security Administration, 2023 Challenges of an Aging Population Social Security is largely a pay-as-you-go systemwith today’s workers (and employers) paying for today’s retirees through the collection of payroll taxes. These taxes (and other income) are deposited in the Social Security trust funds and are then used to cover benefits. As the population ages and birth rates decline, the ratio of workers (paying into Social Security) to retirees (receiving benefits) continues to fall. This means that payroll taxes collected from today’s workers are no longer enough to fully fund Social Security retirement benefits. Consequently, the surplus that was built up in the Social Security trust funds in previous years is now being tapped to fully cover benefits, a trend that is projected to continue unless Congress makes changes to strengthen the program and address projected shortfalls. Social Security’s Board of Trustees project that Social Security should have sufficient resources to pay 100% of scheduled retiree benefits until 2033. Once the trust fund reserves are depleted, payroll tax revenue alone would be sufficient to cover only about 77% of scheduled retiree benefits.