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Social Security to pay out more this year, report says

Social Security card

Social Security card Credit: DOHHS

The Social Security system, which funds benefits to millions of recipients with payroll taxes, will pay out more this year than it will take in, The New York Times reported Wednesday.

If accurate, the prediction about Social Security, the federal pension system, could eventually have profound consequences to beneficiaries, many of whom rely on the checks as their sole means of income.

"When the level of the trust fund gets to zero, you have to cut benefits," Alan Greenspan, who helped rescue Social Security about three decades ago, told The Times in an interview published Thursday.

The chief actuary of the Social Security Administration, Stephen C. Goss, told the newspaper that the projection would have no effect on 2010s benefits, explaining that beneficiaries would continue to get paid the same amount.

The system hadn't been expected to take in less than it needs to pay out until 2016, The Times story reports.

The system is sliding quicker into insolvency because more people in the economic downturn have applied for benefits sooner than expected. With fewer people working, there are far fewer salaries to tax. Experts also blame the worsening woes of the system on the bursting of the real estate bubble.

Federal law prohibits the Social Security system from paying out an amount greater than its balance in a given year, The Times reported.

Within a few weeks, the Social Security administration is set to release its own predictions for this year in its board of trustees' annual report.

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