In another worrying Social Security news, some analysts are stating that if Congress does not act to protect the program’s financing, payment cutbacks of up to 20% may begin as early as 2032.
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.
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 came 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.
As the US reached its debt ceiling limit in recent weeks, Social Security has come up for discussion. President Joe Biden and House Republicans have sworn not to touch Social Security as they fight over federal spending, despite claims that legislators are ready to target the program for budget cuts.
In order to preserve the survival of Social Security, both Biden and Senator Joe Manchin have suggested raising taxes and capping the amount that the wealthiest Americans are required to contribute to the program.
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Social Security Payment Cuts
Using data from the Congressional Budget Office (CBO), the Committee for a Responsible Budget (CFRB) asserts that Social Security could run out of money as early as 2033 to 2035.
Several variables account for this: Because people are living longer, the quantity of money coming in will be affected because they will need benefits for a longer period of time and work fewer years.
There are a ballooning number of beneficiaries as a result of the circumstance. Benefits would be automatically reduced by 23 percent across the board in the event of insolvency, according to the CBO’s assessment, the CFRB stated.
Congress last overhauled Social Security in a significant way in 1983. (48 years following its formal debut 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.
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