http://www.aarpmagazine.org/money/Articles/myths_and_truths_about_social_security.html<snip>
Myth: Social Security is broke.
Those who argue that Social Security needs a dramatic reorganization begin with this premise: the system is failing; Social Security isn't sustainable in its present form. From there, the argument goes that what's best for the country is some form of privatization. With privatization, a portion of the Social Security taxes now paid would be diverted into an account that each taxpayer would control themselves. (Under the current system, all surplus Social Security revenue is invested in special U.S. Treasury bonds.)
So, is Social Security about to go bust? Not by a long shot. In fact, Social Security is in better shape today than at any other time since it was enacted in 1935. That's because of some judicious adjustments suggested in 1983 by a commission set up by Ronald Reagan and headed up by Alan Greenspan. Since then, trust fund reserves have gone from nearly zero to $1.6 trillion.
Social Security trustees acknowledge that by 2028 the system will need to start redeeming the bonds in its reserve, but they calculate that the fund will be able to meet 100 percent of its obligations until 2042. By that date, the principal will be exhausted, but the system will still bring in enough revenue from taxes to pay nearly 75 percent of benefit amounts. (An even rosier Congressional Budget Office report says the system will be able to pay full benefits until 2052, and 80 percent after that.)
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