The Ratio That Doomed Social Security

Chart of the Week #53

Here’s something you won’t hear on the evening news: Social Security is on track to be fully insolvent within the next decade.

You read that right. The combined OASI (retirement) and DI (disability) Trust Funds are projected to be depleted by 2035. In fact, the OASI fund is expected to run dry even sooner, by 2033.

Don't take my word for it. Here's a link to the official 2024 report of the Social Security Board of Trustees just turn to page 3.

In practical terms it means that unless something changes, millions of Americans will wake up one morning to find a quarter of their income gone — overnight.

This looming crisis didn’t come out of nowhere. Social Security’s been heading down this path for a long, long time.

Consider this…

In 1940, when Social Security actually started paying out—five years after its rollout—there were 159 workers for every retiree. Just 10 years later, that number had already dropped to 16.5 workers per retiree. And if you look at this week’s chart below, you’ll see — it only got worse from there.

As you can see, we’re down to about 2.6 workers per retiree today, and the Social Security Administration (SSA) estimates that will drop to just 2.3 by 2035.

Longer life expectancy, falling birth rates, and the massive wave of retiring baby boomers have created a math problem that simply doesn’t work anymore.

And here’s where it gets even worse. This crisis is set to collide with another financial disaster I wrote about previously—a staggering $21.8 trillion in total projected deficits by 2035.

Add in the billions needed to shore up Social Security, and you're looking at a total budget gap that could easily exceed $26 trillion.

That’s an absurd amount of money… and it essentially means more debt.

Regards,

Lau Vegys