According to an article published on MoneyTips.com, a website that provides news and advice related to the finance industry, there are many Americans arguing that Social Security could go bankrupt? However, when we look at the facts, is the idea of Social Security bankruptcy a possibility or just an empty argument?
Is Social Security Bankruptcy About to Become a Reality?
Is it possible that Social Security could go bankrupt, or is there no chance that could ever happen? As with many things, the truth resides somewhere in the middle.
Technically, Social Security cannot go bankrupt. Bankruptcy involves individuals or businesses declaring that they are unable to pay their debts. Therefore, the Social Security system cannot go bankrupt, because the SSA can simply lower the amount of the benefits it pays out to match how much revenue it collects from year to year.
However, while the Social Security system cannot technically go bankrupt, it can become financially unstable enough that Congress can only authorize the SSA to pay out severely reduced benefits to retirees and people with disabilities. As such, if benefit reductions are the closest that Social Security can come to bankruptcy, then it has already gone bankrupt before. Per the Moneytips.com article, Social Security benefits were reduced in 1977 and 1983. The benefits reduction in 1983 saw the pay out to Social Security beneficiaries lowered by 24 percent.
Every day it seems there is news about how the Social Security system is struggling to stay afloat financially and headed for collapse. With such an uncertain outlook for the SSA, could another benefits reduction be on the horizon? If so, depending on how much payments are reduced, it could spell disaster for those who count on retirement and disability benefits to make ends meet.
How Much Do Social Security Disability Benefits Cover?
In the following video, Tulsa Social Security disability benefits lawyer Steve Troutman dispels the misconception that once people start receiving disability benefits, their financial struggles become a thing of the past.