Experts predict that Social Security payment reductions of up to 20% may begin as early as 2032 due to a lack of congressional action to protect the program’s budget.
According to Social Security Administration (SSA) figures from January 2023, there are currently over 66 million persons receiving benefits, with the average benefit amount being $1,691. (SSA).
Social Security Payment Cuts
Payments would be reduced by 20% to $1,352, reversing the gains made in benefit increases through the cost of living adjustments (COLAs), the most recent of which was granted earlier this year and increased payment levels by 8.7%. Even that increased adjustment, according to more than half of retirees, is not enough to support them.
The CBO predicted a “go-broke” date of 2034 in March of last year. It changed that deadline in December, moving it to 2033. As stated by the CBO, should the trust fund run out, the federal government would only be able to pay out 75% to 80% of the planned benefits.
Others that disagree with the CBO’s projections include The Social Security and Medicare Board of Trustees assigned a 2035 go-broke date in their June 2022 report, which was one year later than the 2021 exhaustion date of 2034.
Forty percent of the over 47 million American retirees who receive benefits depend completely on the income they get from the program.
Read more: Social Security 2023: Here are some major points about the changes that you should be aware of
Increase In Taxes
Congress last overhauled Social Security in a significant way in 1983. (48 years after its official launch in 1935). Congress increased payroll taxes levied against American workers in 1983 and raised the full retirement age from 65 to 67.
Each of those two proposals is being considered as a potential solution for 2023, with some MPs advocating raising the retirement age to 70 and raising taxes.
This week, President Biden is scheduled to present his budget proposal, and it is almost certain that funding for Social Security and Medicare will be among the topics covered.
Read more: Those who will turn 62 may be eligible for an additional $2,400!