The Social Security Cost-of-Living Adjustment (COLA) increase of 2.5% starting January 2025 will provide a modest $50 monthly boost for millions of Americans relying on the program. However, concerns about the long-term sustainability of Social Security linger, with estimates suggesting the combined Old Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds could be depleted by 2034.
If the funds are depleted, Social Security may only pay 75% of scheduled benefits, leaving many Americans facing reduced monthly checks. The Congressional Budget Office (CBO) points to an aging population and declining workforce participation as key drivers behind the depletion. By 2031, over 77 million Americans will receive Social Security benefits, while the number of workers contributing to the program grows by only 20%.
Many Americans are skeptical about Social Security’s future, with some expressing concerns that the program might not exist by the time younger generations retire. Investment advisor Tristan Crook notes that legislative action is necessary to ensure the program’s solvency, and potential solutions include raising the retirement age, reducing benefits for high earners, or increasing the payroll tax income cap.
Implementing these measures thoughtfully could extend the program’s solvency by at least 30 years, but they require political consensus – a challenge that has historically delayed meaningful reform. Without timely reforms, millions of Americans may face reduced benefits or additional financial strain in retirement. As the 2034 depletion date approaches, lawmakers will be closely watched for solutions to preserve Social Security.
Source: https://finance.yahoo.com/news/despite-modest-50-monthly-increase-170017294.html