Since the payroll tax cut is reducing the amount of money millions of Americans are paying into Social Security, how is that going to realistically impact both the present and future of SS?
I have been asked this question several times. To answer it requires a little history lesson. When Social Security started people lived an estimated 2 years beyond the normal retirement date and there were 11 people funding each person that was retired. It was easy for the government to disburse the funds without having to borrow the money. In 2008 it was estimated that there were 3 people funding each retired person and the average person lived 13 years. So the problem of funding was going in the wrong direction on both ends with fewer people funding people that are living longer. The impact of the payroll tax cut will probably have little effect on current beneficiaries of Social Security, but the long term effects could be significant depending on how the calculations impact your earnings. The system is already broken and will need to be addressed. It cannot continue to be run by borrowing money. People will get their checks, but what they will be worth remains to be seen.