Social Security is often described as being “at a crossroads” because the program faces a long-term financing problem that requires policymakers to make significant choices.

Why is Social Security at a crossroads?

• More retirees: The large Baby Boomer generation is reaching retirement age, increasing the number of people receiving benefits.

• Fewer workers per beneficiary: There are fewer workers paying Social Security taxes for each person receiving benefits than there were in the past.

• People are living longer: Longer life expectancies mean benefits may be paid for more years.

• The trust funds face depletion: Social Security's retirement trust fund is projected to become depleted in the 2030s under current law. After that, incoming payroll-tax revenue would still finance benefits, but it would not be enough to pay the full scheduled amounts.

• The choices are difficult: Closing the financing gap could involve some combination of raising payroll taxes, increasing the taxable wage base, changing benefit formulas, raising the retirement age, reducing benefits for some recipients, or using other revenues.

The key issue

The important point is that Social Security is not simply “running out of money.” It continues to collect payroll taxes. The problem is that, under current projections, scheduled benefits are growing faster than dedicated revenues.

So the “crossroads” is essentially a policy choice:

Do we change how much money comes into Social Security, change how much goes out, or use some combination of both?

The longer Congress waits to make changes, the more substantial the eventual changes may need to be.