Challenges Facing Social Security Funding

Social Security is projected to encounter significant funding challenges by 2033, with forecasts indicating that promised benefits may be cut by approximately 20% if no action is taken. This situation arises from demographic shifts, notably the retiring baby boomer generation, which has increased the number of beneficiaries extensively. Currently, the ratio of workers to retirees is about two to one, leading to insufficient tax revenue to fully support the growing number of retirees relying on Social Security. Additionally, income inequality plays a role, as many high-income earners do not contribute to FICA taxes on income above a certain threshold, limiting the revenue available to sustain benefits.