In other worrying news about the state of Social Security, CNN reports that some experts are warning that payment cuts of up to 20% could begin as early as 2032 unless Congress intervenes with measures to preserve funding for the program.
According to January 2023 Social Security Administration data, approximately 66 million people currently receive benefits, with the average benefit amounting to around $1,691. (SSA). Cuts of 20% would reduce payments to $1,352, reversing the progress made to increase benefits through cost of living adjustments (COLAs), the most recent of which came earlier this year and increased payment amounts by 8.7%. According to GOBankingRates, more than half of retirees believe that even a higher adjustment is insufficient to get by.
As the United States approached its debt ceiling limit, Social Security has become a point of contention. Despite accusations that politicians are planning to cut Social Security, both President Joe Biden and House Republicans have vowed not to touch the program as they fight over national spending.
Social Security: Payment Cuts Of Up To 20% As Early As 2032(Photo: DNY59 / Getty Images/iStockphoto)
Both Biden and Senator Joe Manchin have proposed raising taxes — as well as capping the amount the wealthiest Americans pay into the Social Security system — to ensure the system’s longevity.
According to the Committee for a Responsible Budget (CFRB), citing Congressional Budget Office (CBO) data, Social Security could become insolvent as early as 2033 to 2035. According to CNN, there are a few reasons for this: people are living longer, which means they need benefits for a longer period of time, and they are working fewer years, which affects the money flow coming in. The scenario is creating a “ballooning number of beneficiaries,” per CNN. Insolvency would result in a significant reduction in benefits: “CBO estimates that benefits would be automatically reduced by 23 percent across the board upon insolvency,” according to the CFRB.
These two measures are also being considered as potential remedies in 2023, with some lawmakers advocating for a full retirement age of 70 and suggesting a tax increase. President Biden is set to deliver his budget proposal this week, and it’s almost certain that both Social Security and Medicare will be addressed.
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