Key Points
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While they may not happen, retirees should factor potential cuts into their long-term financial planning.
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Advocacy groups for Social Security reform are working to protect benefits.
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Ultimately, Congress will determine whether the Social Security trust fund is shored up or runs dry.
The math behind Social Security’s looming funding gap is becoming painfully real for retirees. Congress has known for years that the Social Security trust fund is dangerously close to running dry, and unless it acts to shore it up, Social Security benefits could be reduced by roughly 24%.
The Senior Citizens League estimates that 24.6 million seniors get by on Social Security benefits alone. A new analysis by the Committee for a Responsible Federal Budget indicates that a 22% cut would reduce the annual income of a “dual-earning, low-income couple” by $10,200 at the start of 2033. It puts the reduction to a “dual-earning, medium-income couple” at $16,900 if the cuts come to pass, and the reduction for a “dual-earning, high-income couple” at $22,300.
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The group estimates that the average monthly cut per person could range from $459 to $556. Your benefits — and thus the impact of a percentage cut on them — will depend partly on how much you earned throughout your working years.
No more kicking the can down the road
As everyday Americans plan for retirement, Social Security trust fund insolvency is not sneaking up on anyone. Congress has known for years that something must be done, yet it has delayed action. And this has caused uncertainty for millions of Americans for whom Social Security benefits serve not only as a crucial safety net, but also embody the promise made to them when they began contributing through Social Security payroll taxes.
Recently, a bipartisan group of senators introduced the Protecting Retirement Opportunities and Maintaining Income Security for Everyone (Promise) Act. If passed and signed into law, it would require legislators to make their positions clear by formally voting on measures that affect millions of constituents, ensuring that lawmakers cannot avoid public accountability as they work to fix things.
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