A nonpartisan group is warning that unless swift changes are implemented, Social Security recipients are facing the prospect of a big cut to their retirement benefits.
The Social Security trust fund will deplete its reserves by the year 2033, “when today’s 57-year-olds reach the normal retirement age and today’s youngest retirees turn 72,” the Committee for a Responsible Federal Budget said in a new report.
“Upon insolvency, the law mandates that the OASI trust fund can only spend in amounts equal to incoming trust fund revenue, which means that all 70 million retirees, dependents, and survivors – regardless of age, income, or need – will see their benefits cut by 23 percent,” the group cautions. “For a typical dual-income couple retiring in 2033, we estimate this would represent an immediate $17,400 cut in current dollar annual benefits and an immediate $13,100 cut for a typical single-income couple.”
The committee predicts senior poverty would rise exponentially as soon as the fund becomes insolvent.
According to the latest data from the U.S. Treasury, Social Security is the number one federal government spending category — above national defense, Medicare, veterans benefits, and interest — in terms of outstanding debt.
More than 69 million people are receiving Social Security benefits. On an annual basis, the U.S. is sending out more than $1 trillion in payments.
There are several options to keep the program alive, all of which are politically challenging, including raising the retirement age or eliminating the Social Security tax cap.
Since the program began after the Great Depression, “any income over the earnings cap isn’t subject to the Social Security payroll tax, which is 6.2% for workers and an additional 6.2% for employers,” per CBS News. “In 2023, the tax cap stands at $160,200, which means any income above that amount is exempt from the payroll tax.”
Some Democratic lawmakers and left-leaning policy experts suggest eliminating this cap, subjecting higher earnings to the payroll tax, which would bring in extra revenue for Social Security.
The committee is calling on presidential candidates to pitch a plan to voters on how to solve this issue to avoid income cuts for retirees.
“Any 2024 presidential candidate who pledges not to touch Social Security is implicitly endorsing a 23 percent across-the-board benefit cut for the 70 million retirees when the Social Security retirement trust fund reaches insolvency in just a decade,” the committee says.
Editor’s Note: A previous version of this article did not include a direct quote from CBS News, which has been added for further clarity.
