Answer to Question #59509 in Finance for RENA

Question

If the social security retirement were a private retirement system, it would be declared bankrupt. Explain why this is so and why the social security system can continue to pay benefits even though it can be considered bankrupt?

Answer 1

If the social security retirement were a private retirement system, it would be declared bankrupt, because social security payment expenditures are higher than social security tax revenue. The social security system can continue to pay benefits, because it is financed by the government, even though it can be considered bankrupt.