Last week, we found out that Social Security benefits could be cut sooner than expected. This is worrying for people who plan to retire soon and don’t know if they will have enough money.
Financial experts say not to panic. This week, U.S. Secretary of the Treasury Janet Yellen said that one risk from the government standoff about a debt ceiling is that nearly 50 million seniors could stop receiving Social Security checks for a time.
If Congress doesn’t act to address the long-term funding problem, Social Security and Medicare trustees predict that benefits will have to be slashed by 2034 – a year sooner than previously expected.
If Congress does nothing, Social Security will only be able to give people who are retired or disabled 78% of the benefits they were promised. Some news reports say that number is closer to 75%.
There’s no question why the money is disappearing sooner than planned. Last year’s economic downturn caused by the pandemic, which led to a significant reduction in employment, resulted in declining revenue from payroll taxes.
But just because Social Security payments might have to be curtailed early doesn’t imply that money is running out, as some people worry. That won’t happen, according to Monotelo Advisors, a financial and tax planning firm in Chicago.
The Social Security trust fund is projected to be completely depleted by the middle of next decade if no adjustments are made. According to Monotelo, if the only funds accessible to Social Security by the end of the next decade are current wage taxes paid in now, then it will still be able to pay approximately three-quarters of promised benefits.
“While a 25% reduction in benefits may have a significant detrimental impact on Social Security beneficiaries who rely on their benefits, it is far less harmful than the program being terminated entirely,” Monotelo added.
“There are things that can be done to get the program back on track,” Thoma added. “To keep the program fully funded throughout the 75-year time horizon (they run it for 75 years — through 2095), payroll taxes would need to rise about 3.36%, or roughly 1.7% for both employers to fully refund the program.
“If nothing is done, benefits would have to be reduced by 24% in 2034 (they could pay 76 cents on the dollar in benefits). ”
That’s assuming the federal government does nothing to address Social Security. Other options that might be considered include increasing the retirement age, changing the benefit formulas, and eliminating the taxable income ceiling.
“The key thing to remember here is that Social Security is not necessarily going bankrupt,” Thoma Added.
Some retirees may be tempted to apply for benefits early in order to receive as much money as possible before the funds run out. But this isn’t always the case.
Related:
You can start by quit giving money we put in to worthless illegals an those who never put a dime into it. Cockroaches
If as many old people died from Covid as they say they should have a lot more money in S.S.
If the government would keep their hands off social security it would be fine. I think they should take a pay cut. The house and senators make way to much money as it stands now. Don’t cut SS cut their pay in half and that would help SS survive.
That is OUR money, they act like they are giving us something for nothing! Every penny belongs to us! Why don’t they take a pay cut out of that 250,000 plus they receive for the rest of their lives?!!!
No! They think they are giving this to us like welfare but that is our money! We worked for that money they took it from us and we’re supposed to save it for us with interest to be paid when they say we are no longer able to work! Not spend it on their own foolishness!!
Really people’s that’s on SS should get a check really need it 🤠 because some people’s are not working & need the the money 💰 to pay bills also to help with their Grandchildren’s.THANK YOUR & THANK GOD.
I agree
What we need is to have the Feds pay back the billions that they borrowed, it may not be enough but I also think we need to charge them interest on what “they” stole from the American people.
PRESIDENT BIDEN STOP GIVING MONEY ONLY TO ONE CATEGORY OF PEOPLE! IF YOU’D DID THIS, THEN ALL INCUDING SSI/SSDI WOULD BE PROVIDED FOR DURING THIS PANDEMIC. ONES HE CHOOSES NOT TO PROVIDE FOR WILL NOT VOTE HIM BACK IN. THEY ARE WORKERS WHOM RETIRED AND VETERANS PLUS OTHERS WHOM HAVE ILLNESSES THAT INABLE THEM TO WORK. THE OLDER GENERATION FROM WHERE MOST VOTES HE GAINED!
Instead of taking money from Social Security take the money from WELFARE & the undocumented immigrants that the Democrats are letting into our country.
Why is it always the people on SS why not the pensions that congress & senate who never put a penny to it get the cuts, how about all you millionaires that stole the money out of Social Security get your pays cut.