The Social Security Gap
Social Security isn’t disappearing tomorrow, but how it’s funded is starting to shift.
The Big Story
Social Security is funded by a 12.4% payroll tax on income up to $168,600. That money pays current retirees.
Today, the program pays out more than it brings in, so it uses its trust fund to cover the gap.
The Two Spins
From the Left
Keep full benefits in place and increase funding to close the gap.
Raise or remove the income cap or increase payroll taxes so more money flows in.
From the Right
Slow how fast Social Security payments grow so they better match what’s coming in.
Adjust how benefits are calculated for future retirees or raise the retirement age.
What This Means for Us
About 67 million people receive Social Security today. In 1960, there were about 5 workers per retiree. Today, it’s closer to 2.8.
Fewer workers supporting more retirees means less money coming in while more is being paid out.
How They Make Money
IBM works on systems tied to Social Security, including legacy infrastructure (some still built on COBOL from the 1970s) that tracks earnings and calculates benefits.
IBM is part of modernization efforts worth billions, helping update systems where even small changes can take years.
Takeaway
Keeping an outdated system running at scale has quietly become a major business.
The Number That Stuck With Me
80%
If nothing changes, benefits are projected to drop to about 80% around 2033, that’s about $200 less for every $1,000 check.