Guest Post by Jessica Hall
Social Security’s future may be even more dire than expected as time is running out to shore up the program’s finances.
Social Security will be insolvent by mid-2032, triggering a 26% benefit cut, which will rise to 40% by the end of the century, according to the latest projections from the Congressional Budget Office.
The CBO’s projected cuts are deeper than the 22% benefit reduction forecast by the Social Security Trustees in June. The cuts will be automatic unless Congress acts first to strengthen the system. The CBO is the nonpartisan federal agency that provides Congress with independent analysis of budgetary and economic issues.
The cuts would be significant. As of July, the average Social Security retirement benefit was about $2,086 a month, according to the Social Security Administration. Beneficiaries are already facing a 22% decrease in 2032 — or $459 in today’s dollars — if Congress doesn’t act. The 26% cut predicted by the CBO would be the equivalent of a $542-a-month drop in benefits in today’s dollars. The actual cuts would be higher in 2032 due to inflation.
“This is not a drill. This is just one of the major issues that needs attention and hasn’t received it from our current Congress,” said Mary Johnson, an independent Social Security and Medicare analyst.
“Social Security legislation takes time for full and open debate. Members of Congress hate to openly debate it because there are two paths to solvency — benefit cuts and tax increases. The last time Social Security underwent major reforms in the 1980s, Congress was unable to agree and we were within months of insolvency,” Johnson said.
Social Security, which provides benefits to more than 70 million retired workers and people with disabilities, faces increased pressure from last year’s One Big Beautiful Bill Act tax law, reduced immigration and lower fertility rates, according to the Social Security and Medicare board of trustees.
Social Security plays a crucial role in the finances of older adults. Among Americans 65 and older, 40% rely on Social Security for half or more of their income, while about 14% depend on it for 90% or more of their income, according to AARP.
“Millions of Americans could face an abrupt benefit cut if Congress fails to act. For someone who depends on Social Security to pay the rent, buy groceries, and afford prescriptions, that’s not a budget adjustment. That’s a financial crisis,” said Shannon Benton, executive director of the Senior Citizens League, an advocacy group.
The projected cuts come as the Federal Reserve recently raised interest rates for the first time since 2023 to try to tame stubborn inflation. Costs for items including food, gas, healthcare and housing have risen.
The projections also come as the midterm elections loom in November.
The CBO’s “projections underline that Social Security is on the ballot. Senators elected to six-year terms this November will take votes that determine the future of Social Security. Many of the people elected to the House of Representatives this November will take those votes, as well,” Nancy Altman, president of Social Security Works, an advocacy group, told MarketWatch by email.
“There are only two options for Social Security’s future: make the wealthy contribute their fair share, including on unearned investment income. Or cut Social Security’s hard-earned benefits.
Every candidate running for Congress needs to tell voters which of those options they support,” Altman said.
“Congress has known this was coming for decades. Every year lawmakers wait means less time to find a bipartisan solution and less opportunity to phase in changes gradually so retirees and workers can prepare,” Benton said.
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[ H/T The Burning Platform ]
‘This is not a drill:’ Social Security provides benefits to more than 70 million retired workers and people with disabilities
Social Security’s future may be even more dire than expected as time is running out to shore up the program’s finances.
Social Security will be insolvent by mid-2032, triggering a 26% benefit cut, which will rise to 40% by the end of the century, according to the latest projections from the Congressional Budget Office.
The CBO’s projected cuts are deeper than the 22% benefit reduction forecast by the Social Security Trustees in June. The cuts will be automatic unless Congress acts first to strengthen the system. The CBO is the nonpartisan federal agency that provides Congress with independent analysis of budgetary and economic issues.
The cuts would be significant. As of July, the average Social Security retirement benefit was about $2,086 a month, according to the Social Security Administration. Beneficiaries are already facing a 22% decrease in 2032 — or $459 in today’s dollars — if Congress doesn’t act. The 26% cut predicted by the CBO would be the equivalent of a $542-a-month drop in benefits in today’s dollars. The actual cuts would be higher in 2032 due to inflation.
“This is not a drill. This is just one of the major issues that needs attention and hasn’t received it from our current Congress,” said Mary Johnson, an independent Social Security and Medicare analyst.
“Social Security legislation takes time for full and open debate. Members of Congress hate to openly debate it because there are two paths to solvency — benefit cuts and tax increases. The last time Social Security underwent major reforms in the 1980s, Congress was unable to agree and we were within months of insolvency,” Johnson said.
Social Security, which provides benefits to more than 70 million retired workers and people with disabilities, faces increased pressure from last year’s One Big Beautiful Bill Act tax law, reduced immigration and lower fertility rates, according to the Social Security and Medicare board of trustees.
Social Security plays a crucial role in the finances of older adults. Among Americans 65 and older, 40% rely on Social Security for half or more of their income, while about 14% depend on it for 90% or more of their income, according to AARP.
“Millions of Americans could face an abrupt benefit cut if Congress fails to act. For someone who depends on Social Security to pay the rent, buy groceries, and afford prescriptions, that’s not a budget adjustment. That’s a financial crisis,” said Shannon Benton, executive director of the Senior Citizens League, an advocacy group.
The projected cuts come as the Federal Reserve recently raised interest rates for the first time since 2023 to try to tame stubborn inflation. Costs for items including food, gas, healthcare and housing have risen.
The projections also come as the midterm elections loom in November.
The CBO’s “projections underline that Social Security is on the ballot. Senators elected to six-year terms this November will take votes that determine the future of Social Security. Many of the people elected to the House of Representatives this November will take those votes, as well,” Nancy Altman, president of Social Security Works, an advocacy group, told MarketWatch by email.
“There are only two options for Social Security’s future: make the wealthy contribute their fair share, including on unearned investment income. Or cut Social Security’s hard-earned benefits.
Every candidate running for Congress needs to tell voters which of those options they support,” Altman said.
“Congress has known this was coming for decades. Every year lawmakers wait means less time to find a bipartisan solution and less opportunity to phase in changes gradually so retirees and workers can prepare,” Benton said.
Tweet
Continue reading...
[ H/T The Burning Platform ]
