Social Security’s retirement trust fund is projected to become insolvent in less than a decade, with a new analysis revealing that beneficiaries would face automatic 24% benefit cuts if the trust fund is depleted. The Committee for a Responsible Federal Budget (CRFB) found that the current funding trajectory would lead to insolvency by late 2032.
The trust fund’s insolvency would be triggered by federal law, requiring benefits to be cut to match incoming revenues. The CRFB analysis shows that Social Security’s benefit cut would vary based on a couple’s age, marital status, and work history. For example, a dual-income couple with a medium income who retires at 2033 could see an $18,100 annual benefit cut.
Experts warn that the current law’s temporary enhanced deduction for seniors has increased the size of the benefit cut by about a percentage point, making it larger if made permanent. The Social Security trust fund is facing depletion due to the aging of America’s population, with the ratio of workers to retirees shifting from 8.6 in 1955 to 2.8 as of 2013.
The depletion of the trust fund could be compounded by the insolvency of Medicare’s hospital insurance trust fund, which is projected to be depleted in 2033 and faces an 11% cut to scheduled benefit payments. The CRFB urges policymakers to pursue trust fund solutions to head off insolvency and improve the program for current and future generations.
Source: https://www.foxbusiness.com/politics/social-security-benefits-face-24-cut-less-than-decade-trust-fund-dries-up-new-analysis-reveals