There’s growing concern among financial experts about the impact of an increasing number of Social Security claimants and the aging American population.
Over the past 50 years, the US population has grown by a significant 103 million people. This increase has led to a more than seven percent rise in Social Security claimants according to the Social Security Administration’s data.
The data also indicates that the number of Social Security beneficiaries has been growing at an average rate of 1.8 percent. If this trend continues, by 2053, it’s projected that there will be around 36.2 million recipients, which would make up over 27 percent of the US population based on current forecasts.
It’s important to note that the Social Security Administration’s funding comes from the taxes paid by workers.
The number of retired claimants has surged from 16.5 million in 1970 to 52.7 million in 2023, making up 15.7 percent of the population. Experts predict that by 2030, one-fifth of Americans over 65 will still be alive, and post-2030, the US will see significant aging, increased diversity, and slow population growth according to the US Census Bureau.
The Social Security Administration is facing a financial crisis in the near future due to the escalating number of claimants. The depletion of the Old-Age, Survivors, and Disability Insurance (OASDI) fund is now expected in 2035, pushed back by a year due to combined reserves.
If the funds run out, the SSA predicts that by 2035, only 83 percent of scheduled benefits can be paid out at current rates.
Stephen Kates, a principal financial analyst at RetireGuide.com, mentions that the growing number of retirees is a concern, but the SSA has already factored in this increase in its current projections. Any changes in assumptions about tax revenues, age, disability claims, or beneficiary longevity could affect these projections.
In 1970, there were 25.7 million Social Security claimants, comprising 12.6 percent of the US population. By 2023, this number has risen to 67.1 million. Currently, approximately 20 percent of Americans are receiving Social Security benefits.
The SSA is estimated to spend $2.3 trillion in 2023 on direct payments to beneficiaries. Expenditures on Social Security and Medicare are expected to rise from 9.1% to 11.5% of GDP by 2035, primarily due to the significant number of elderly adults in the population.