Social Security Benefits Will Be Lost Before 2033: Here’s Why It’s Serious: The Social Security trust fund is expected to run out of money by 2033, according to a new report. Unless Congress acts before then, benefits for millions of retirees will be cut by 23%. The Social Security Trust Fund is expected to run out of cash in eight years, according to a new report.
Social Security Benefits Will Be Lost Before 2033
The Social Security Fund will run dry in 2033 unless Congress combines the program’s old age and disability funds, in which case insolvency would arrive in 2034, the report found. A finding last year predicted Social Security would become insolvent in 2035 or 2036.
If Congress fails to address the projected budget shortfalls, automatic cuts will dial back Social Security benefits by 23% and Medicare hospital benefits by 11% in 2033, the report found. Roughly 66 million Americans receive medical coverage through Medicare, while 70 million people are set to receive Social Security benefits this year.
A separate trust fund supporting Social Security disability payments is projected to remain solvent through 2099. If the two funds were combined, which would take an act of Congress, the pooled fund would last through 2034, after which benefits would automatically be cut by 19%.
Not increasing Social Security revenue is the same as supporting benefit cuts.”
Congress could address the shortfall in a number of ways—by raising taxes, cutting benefits, or some combination of the two.” Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare, the trustees said.
President Trump has vowed not to touch Social Security benefits. But if no changes are made to the program, the law calls for benefits to be cut automatically once the trust fund is exhausted. “Any politician who doesn’t support increasing Social Security’s revenue is, by default, supporting benefit cuts.” Says Nancy Altman, president of the advocacy group Social Security Works.
Taxing higher-income earner would keep provide revenue
Currently, top earners don’t pay social security taxes on any income above $176,100 a year. Altman says assessing Social Security taxes on higher incomes, including investment income, would provide enough revenue to keep paying full Social Security benefits through the end of the century.
“America is the richest country in the history of the world, at the wealthiest moment in our history,” Altman says. “That money can remain concentrated in the hands of billionaires, or it can go towards Social Security, enriching all of our lives.
Why Social Security’s trust funds face depletion dates
Social Security draws from multiple sources to pay benefits: ongoing revenue from payroll taxes and income taxes, as well as trust funds that are used to supplement the monthly checks beneficiaries receive.
Yet as more people collect Social Security retirement benefits, the trust fund used to pay those benefits is running low. The depletion date, currently 2033, represents the point at which the fund will be exhausted.
Social Security has more than one trust fund, including one that pays retired workers, their families, and survivors, and a second that pays disability benefits.
How broad benefits cuts sould be avoided
As the November election approaches, experts generally hope a new president and new Congress will address Social Security’s solvency. “We far prefer for Congress to enact comprehensive Social Security reforms before 2033, the AEI report says.
The sooner Congress acts, the better it will be for all beneficiaries involved to give them more certainty, said Shai Akabas, executive director of the Bipartisan Policy Center’s Economic Policy Program.
That change would reduce payments to beneficiaries who receive more than that amount and make Social Security solvent without adding new debt or increasing taxes. At the same time, about half of all retirees and survivors would still receive their full benefit payments. Notably, no retiree would be pushed into poverty, according to the research.
Conclusion
In this article we discussed the Social Security Benefits Will Be Lost Before 2033. Here’s Why It’s Serious: The Social Security trust fund is expected to run out of money by 2033, according to a new report. A finding last year predicted Social Security would become insolvent in 2035 or 2036. Unless Congress acts before then, benefits for millions of retirees will be cut by 23%.