Experts are warning that Social Security payments could be cut by up to 20% by 2032 if Congress does not act to preserve funding for the program.
Social Security System (Photo: GOBankingRates)
Over 66 million people receive Social Security benefits, with the average payment being $1,691 as of January 2023.
However, if payments are cut by 20%, this would decrease payments to $1,352. Despite a recent debate about national spending and accusations of potential budget cuts, President Joe Biden and House Republicans have vowed not to touch Social Security.
To ensure Social Security’s longevity, President Biden and Senator Joe Manchin have proposed raising taxes and the cap on which the wealthiest Americans pay into the Social Security system. However, Social Security could become insolvent between 2033 and 2035, according to the Committee for a Responsible Budget (CFRB), citing Congressional Budget Office (CBO) data.
The increase in life expectancy, leading to a longer period of benefits, and a reduction in years of work, leading to less money flowing into the system, are among the reasons that may cause Social Security to become insolvent. This situation is creating a “ballooning number of beneficiaries,” according to CNN.
If Social Security becomes insolvent, benefits could be automatically cut by 23% across the board, according to the CFRB.
The last time Congress performed a major overhaul of Social Security was in 1983, 48 years after its official launch in 1935 when Congress raised the full retirement age from 65 to 67 and increased payroll taxes taken from American workers.
Lawmakers are considering various measures to ensure the longevity of Social Security, such as increasing the full retirement age to 70 and raising taxes. President Biden is set to deliver his budget proposal this week, and the funding of both Social Security and Medicare is expected to be on the agenda. More than half of retirees say that the recent 8.7% cost-of-living adjustment is still insufficient to get by, as reported by GOBankingRates.
The urgency of addressing the issue of Social Security’s solvency and ensuring its longevity has become increasingly apparent in recent years, and the actions were taken by Congress and the President will have significant implications for millions of Americans who depend on Social Security for their financial well-being.
