How is social security in the US at risk of running out of funding, if every tax payer pays into it?
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Social Security was designed to work like a pension fund. It works because more people pay into it than take out. It is paid for with a dedicated Payroll Tax.
But since 2010 the system has been running on a shortfall meaning the systems cash reserves are dropping faster than they can be replenished.
This is mostly because there is a significant aging population in the US right now. As the baby boomers retire it is putting a lot of pressure on the system that will last until they pass.
Much of the social security fund has also been loaned to the government. The US government borrows money from the social security trusts but must pay it back with interest.
Now that the fund is running on a shortfall, it’s calling in those debts and the US government must borrow more money to pay it down adding to the Federal Debt.
Eventually the US government will either have to slash social security benefits, or print/borrow money to keep it going, or worst case kill the program entirely.
But once the aging population stabilizes it will start working again.
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