Some say the US Treasury will go bankrupt without changes.

On the Christian Churches Pension Plan Facebook page, we recently shared advice from GuideStone Financial Services noting the risks ministers accept when they opt out of Social Security.1 One minister responded, “I opted out many years ago when the thinking was that Social Security would not be around anyway. I was advised by my CPA who specialized in minister’s taxes at the time.” Many seasoned citizens may recall similar warnings from their ancestors.

The prediction continues today. The conservative American Enterprise Institute has consistently warned the United States Treasury will face bankruptcy without reform to entitlement programs.2 Rep. Kurt Schrader, an Oregon Democrat, has stated, “In just a few decades, Social Security, Medicare and Medicaid, other mandatory spending programs, and paying interest due on the debt will eclipse our entire budget.”3 Schrader further asserted an uncontrolled growth of Social Security would leave no funds for virtually anything else in the Federal Budget.

Others say this is simply not true!

There are voices from both the political right and left who say these claims are simply untrue. In 2016, Alicia Munnell wrote, “Save Social Security from the budgeteers!”4 She admits that the program is in need of alteration. However she states that it needs only to be reformed, not cut. Some may simply point to headlines like this from Forbes magazine in 2014, “Social Security Cannot Go Bankrupt”5, and claim there is no reason to be concerned.

What is the current reality?

It is true that the Social Security Trust Fund cannot “run out of money,” because it is funded by taxes collected from those who are earning. However, it is entirely possible for the annual receipts of those taxes to be insufficient to cover the payments made! As John Harvey accurately described, Social Security is not and never has been a retirement fund. It is instead a tax taken from those who are working today and transferred to those who are retired today.6

If future Social Security tax receipts are insufficient to cover payments, Congress will be faced with a decision. Benefits may be reduced. Taxes may be increased in any number of manners in the hope of increasing receipts. The age of retirement may again be raised. If none of those are chosen, the U. S. Government must borrow more money to cover the payments.

It appears the current political climate is few want to address the issue. President-elect Donald Trump has no plans to cut Medicare or Social Security, incoming White House Chief of Staff Reince Priebus said.7 The same would have been true had Hillary Clinton been elected.8 When anyone in Congress proposes action, political opposition quickly makes that action a re-election issue.

How should we respond?

It would seem prudent to plan for Social Security to exist in some form. The reality is that in 2034 Social Security retirement payments would have to be reduced by 25% in order to balance with tax receipts.9 Perhaps adjustments will be passed, but the political climate is that Social Security Retirement payments will continue.

One of the more treasured benefits from years past was the classic pension plan. Though they are now fewer in number, plans promising an income for life created significant peace of mind. Ministry and nonprofit personnel devoting their lives to the service of others in Christ’s name do have the classic pension plan available to them. The Christian Churches Pension Plan offers the income for life promise.

You may plan to continue working in some fashion. Fortunately, ministry or nonprofit part time employment is often easily available. Adjust your expense expectations in retirement! Curb entertainment plans. Choose a nice place to live offering good housing and quality healthcare at a lower cost of living. The ultimate decision is to live a thrifty lifestyle, and accept the personal responsibility of saving now to enable a dignified lifestyle after retirement.

1 Social Security Considerations: Why Opting Out Is Not the Answer. GuideStone Financial Resources.
2 Entitlement reform remains an absolute necessity. Capretta, James C. Real Clear Policy. June 13, 2016.
3 Will entitlement programs and debt swamp federal revenues in the near future? Pope, Charles. Politifact. February 3, 2012.
4 Save Social Security from the budgeteers! Munnell, Alicia H. MarketWatch. June 2, 2016.
5 Social Security Cannot Go Bankrupt. Harvey, John T. Forbes. August 14, 2014.
6 Harvey, ibid.
7 No Plans by Trump ‘to Touch Medicare of Social Security’: Priebus. Dukakis, Ali. ABC News. January 15, 2017
8 Capretta, op. cit.
9 Is the Social Security Trust Fund Running Out of Money? Frankel, Matthew. The Motley Fool. July 24, 2016.