Will Social Security End in 2035?
Social Security is one of the most important social welfare programs in the United States, providing financial assistance to millions of elderly, disabled, and low-income individuals. However, the future of the program is uncertain, with concerns that it may end by 2035.
According to the Social Security Board of Trustees 2022 annual report, the program’s cash reserves will be fully depleted by 2034, one year earlier than expected. This means that without changes to the program, benefits will have to be reduced by almost 25%, which would affect millions of retirees who rely on Social Security as their primary source of income.
One of the reasons for the program’s financial challenges is the changing demographics of the United States. Longer life expectancies, a smaller working-age population, and an increase in the number of retirees are some of the factors contributing to Social Security’s budget shortfall. By 2035, the number of Americans aged 65 and older will increase to over 78 million, up from about 56 million today.
Several proposals have been suggested to address the budget shortfall, including raising the payroll tax rate, increasing the wages subject to Social Security taxes, raising the full retirement age, reducing the annual cost-of-living adjustments, and cutting benefits. However, each proposal comes with its own set of challenges and limitations.
According to a published article in Go Banking Rates, raising the payroll tax rate is one option to increase tax revenue for the program, but it is seen as unlikely due to resistance to tax hikes. Increasing the wages subject to Social Security taxes is another option, which would affect high-income earners who currently avoid paying Social Security taxes. Raising the full retirement age is also a possibility, which would mean younger generations will have to work longer before they can start collecting benefits.
Cutting benefits is a controversial option that would negatively impact millions of retirees who rely on Social Security as their primary source of income. However, it may be necessary if no other options are viable.
Overall, the future of Social Security is uncertain, but changes need to be made to ensure its sustainability. The proposed options to balance the program’s budget come with challenges, and it remains to be noticed what changes will be implemented to tackle the problem. It is important to monitor these developments to understand how they will affect Social Security benefits for future retirees.