Savannah Hulsey Pointer, FISM News
According to new estimates from the Congressional Budget Office, if benefits are paid as scheduled, the Old-Age and Survivors Insurance Trust Fund would run out by 2033.
The largest cost-of-living adjustment since 1981 was given to Social Security beneficiaries in January, when their monthly checks increased by 8.7%. The average recipient’s monthly benefit increased by $146 thanks to the increase. The average benefit is anticipated to increase to $1,827 from $1,681 as a result, the Center Square reported that the Social Security Administration has reported.
According to the most recent report from the federal organization that provides budget and economic information to Congress, the Disability Insurance Trust Fund would run out by 2048 if the same schedule were followed.
The federal government would need to immediately raise payroll tax rates by 4.9 percentage points, reduce benefits, or implement a combination of tax increases and benefit reductions in order to keep the funds solvent through 2096.
“After 2096, however, the gap between revenues and outlays would widen, and shortfalls would continue to increase,” according to the CBO report.
Social Security benefits would be roughly 23% lower than scheduled benefits in 2034 if payments were restricted to payable revenues following the trust fund’s depletion in 2033. By 2096, they would be 35% smaller, and the gap would then stay the same.
There are two parts to Social Security, which is the largest single program in the federal budget. Benefits are provided by the Old-Age and Survivors Insurance to retired employees, their eligible dependents, and some survivors of deceased employees. Benefits are provided by disability insurance to disabled workers and their dependents.
Both payroll taxes and income taxes on benefits are used to pay for Social Security. Payroll taxes are typically 12.4% of earnings up to an annual cap. In 2022, that sum was $147,000. Each employee and their employer contributes 50% of the 12.4%. According to the CBO, self-employed people pay the full amount. According to the report, that 12.4% would need to be increased to 17.3% of taxable payroll in order to cover benefits as mandated by current law and keep trust fund balances through 2096.
“Other ways to maintain the necessary trust fund balances include reducing scheduled benefits by an amount equivalent to 4.9% of taxable payroll or combining tax increases with benefit reductions,” the report noted.
The AARP claims that Social Security is the main source of retirement income for the majority of Americans. According to AARP, it provides almost all of the income for 1 in 4 seniors.
According to a recent survey, 90% of people 50 and older who currently receive or will receive Social Security retirement benefits express concern that their benefits may not keep up with inflation. Due to this, AARP is pleading with Congress to cooperate across party lines in order to safeguard and strengthen Social Security.
“Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security to help pay for Joe Biden’s reckless spending spree, which is more reckless than anybody’s ever done or had in the history of our country,” former President Donald Trump said Friday in a video posted on Truth Social.
According to media reports, some Republicans have suggested that modifications to Social Security and Medicare should be taken into account. These calls have not been embraced by Republican leaders.