Social Security is facing a financial crisis that could leave millions of Americans without adequate income when they retire. Currently, about 67 million Americans receive benefits from the program, with nearly US$1.4 trillion in benefits paid out annually. The program’s trust funds hold around $2.7 trillion but are expected to be depleted by 2035.
If these trust funds run dry, Social Security will only have enough money to cover about 79% of promised benefits. This would result in a significant reduction of monthly checks for those relying on the program, with some recipients facing cuts of up to 21%.
Experts warn that Democratic and Republican administrations alike have failed to address the issue, and now it’s time for policymakers to take action. To shore up Social Security’s finances, analysts suggest increasing the retirement age by one month every two years, increasing the cap on income subject to the payroll tax, or gradually reducing benefit growth.
The key principles for reform include making the program self-funded, sharing the burden across generations, and ensuring that benefits remain adequate for lower-income retirees. Ideally, any changes should also help constrain future growth in federal spending.
Previous attempts to reform Social Security have been met with limited success, with the last major overhaul occurring in 1983 during the Reagan administration. This led to gradual reductions in benefits over time, including increasing the full retirement age and the payroll tax rate.
It’s essential for policymakers to engage in a serious debate on these issues, rather than waiting any longer. Delaying action will leave millions of older adults without adequate income, plunging them into poverty.
Source: https://www.mississippifreepress.org/opinion-social-securitys-trust-fund-could-run-out-of-money-sooner-than-expected