(Simon Black, Sovereign Man) The CDC’s National Center for Health Statistics released some alarming data earlier this week that surprisingly had absolutely nothing to do with Covid for a change.
The report showed that the birthrate in the United States last year declined to its lowest level on record ever since the government began collecting data more than 110 years ago.
This new record low birth rate breaks the previous record set in 2018, which broke the previous record set in 2017, which broke the previous record set in 2016…
You get the idea. This has been a long-term issue: people just aren’t having babies anymore. And it’s not just in the Land of the Free.
Fertility rates are low all over the developed world– far below the ‘population replacement level’ of around 2.2 children per mother…
It’s easy to see why low birth rates and declining populations can cause these social security programs to fail.
But Covid is having an even deeper impact on these programs. Because in addition to making the fertility problem worse, Covid has also vanquished tax revenue.
In the US, for example, Social Security is funded almost exclusively by payroll taxes. So when tens of millions of people lose their jobs, payroll tax revenue declines, and Social Security runs a big deficit.
I’ve been writing about this for years: Social Security is already in deep trouble.
The program’s Trustees (which include the Treasury Secretary of the United States) write in their most recent annual report that Social Security’s trust funds will run out of money by 2035.
Again, though, that was pre-Covid. Financial crises tend to make these things a lot worse.
Back in 2007, the last year before the Great Recession, Social Security projected it would run out of money in 2041.
But the financial crisis took such a toll that, after it was over, they revised their projected insolvency date down to 2035.
Social Security hasn’t updated its projection yet to incorporate the Covid impact, and they probably won’t until next year.
But the Bipartisan Policy Center ran the numbers using Social Security’s own financial model. And according to their analysis, Social Security is now set to run out of money in 2029.
That might seem like a long time from now, but from a retirement perspective, it’s just around the corner.