A new report indicates that the Social Security program is expected to run out of money by 2033 due to slower-than-predicted economic growth.
A Social Security and Medicare Trustees report released March 31 found the entitlement program could face insolvency a year earlier than previously reported, in part, due to a revision of gross domestic product and labor productivity over the coming years. Those benefits, which go to retired workers by in large, impact about 50 million people per month, with recipients getting an average payment of about $1,800, according to the Social Security Administration.
It added that if no significant changes are made before 2034 to shore up its funds, around 66 million Americans could see a benefit reduction between 23 percent and 25 percent.
“The combined trust funds will be insolvent by 2034, when today’s 56-year-olds reach the full retirement age and today’s youngest retirees turn 73,” the Committee for a Responsible Federal Budget (CRFB) said in an analysis. “Upon insolvency, all beneficiaries will face a 20 percent across-the-board benefit cut.”
The group added that the “Social Security program is only 11 years from insolvency, with insolvency of the old-age program only a decade away” and warned that “action must be taken soon to prevent an across-the-board benefit cut for many current and future beneficiaries.”
And if no action is taken, “all retirees regardless of age, income, or need will face a 20 percent across-the-board benefit cut, which will grow to 26 percent by the end of the 75-year projection window” upon insolvency of the program, the group added.
For years, insolvency has been hovering over Social Security. But some experts have said that recent reports should be no cause for alarm.
“First of all, a year’s worth of fluctuation in the reserve depletion date is not a cause for alarm,” wrote Kathleen Romig, the director of Social Security and disability policy at the Center on Budget and Policy Priorities, on Twitter. She noted that trustees have forecast an insolvency date between 2033 and 2035 for years.
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