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Low interest rates a growing threat to Social Security Social Security retirement benefits for younger generations could be at risk, as U.S. Treasury yields are at historic lows and could threaten the program's solvency, economist say. The trust fund has seen a decline in earnings from Treasury bonds over the years as the economy recovers very slowly and interest rates remain at historical laws, with the income from tax revenue not enough to fund Social Security and other government obligations, according to this article on MarketWatch. Making the problem worse, the Social Security trust fund only invests in U.S. Treasuries, whose yields have been suppressed by tepid economic growth and unusually strong demand by investors worldwide for financial safety. Indeed, the benchmark 10-year Treasury is yielding an all-time low of 1.51%, compared with about 4% before the recession from 2007 to 2009, and 6.8% from 20 years ago. The ultimate impact, if any, would affect Americans born between the mid-1960s to the mid-1970s, according to the article. There are a number of political changes that could be implemented (for instance, an older retirement age or an increased cap on payroll taxes), but if no changes are made to the current situation, financial demands will soon start draining the trust fund faster than it can be replenished, and by 2034 it would be depleted. --MarketWatch
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