Social security financing improved slightly last year. But benefits could still be cut automatically within 10 years unless Congress takes action to shore up the program.
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Social security financing improved slightly last year. But benefits could still be cut automatically within 10 years unless Congress takes action to shore up the program.
Kevin Dietch/Getty Images
Congress has less than 10 years to fix Social Security until the popular program is underfunded and threatens to slash benefits for nearly 60 million retirees and their families, according to reports. . government report It was released on Monday.
A report from the Social Security Administration Board predicts that the retirement program’s trust funds will be depleted in November 2033. At that point, benefits would be automatically cut by 21% unless lawmakers adopt a change by then.
There’s some good news in the new forecast. Thanks to better-than-expected worker productivity and an expected decline in disability, Social Security is not running out of cash as quickly as the trustees predicted a year ago.
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Still, long-term demographic challenges remain. While the number of baby boomers receiving benefits is increasing, the number of people in the labor force paying taxes per retiree is decreasing. Given today’s low birth rates, this discrepancy is expected to remain the same for decades, although a surge in immigration will help.
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Congress could solve the problem by raising taxes to support Social Security, cutting retirement benefits, or a combination of the two. However, it is difficult to find a politically acceptable solution.
“When you see two major candidates running for president stumbling around promising things they won’t do to solve problems, you should be worried. Because seed reform really starts at the top,” said party president Maya McGuineas. Committee for a Responsible Federal Budget.
The Biden administration has promised not to touch Social Security benefits.
“Older adults have worked their whole lives to earn the benefits they deserve,” said Treasury Secretary Janet Yellen, who heads the trustees’ committee. statement. “We are committed to taking steps to protect and strengthen these programs that Americans rely on for a secure retirement.”
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Congressional Democrats have proposed raising taxes on the wealthy to support Social Security. Republicans in Congress have balked at that, calling instead to cut benefits and raise the retirement age for younger workers.
“Those who want to cut Social Security say they can do it affordably,” said Nancy Altman, president of the advocacy group Social Security Works. “But, of course, there’s no question that we can afford it. It’s really a question of values. And as polarized as we are, we don’t think we can afford it. It’s not polarizing.”
Altman is confident lawmakers will find a solution before automatic cuts are triggered.
“If they don’t take action, not only will they all be voted out of office,” she says. “They couldn’t even stay in Washington. They would be chased on the streets.”
But time is ticking, and delays are already taking a heavy toll.
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“Trustees warn us every year that we need to make changes, but the sooner we make them, the better and easier it will be,” McGuinius says. “And every year we fail to make those changes.”
Medicare and disability ability to pay
While Social Security’s retirement program is on the verge of running out of money, another program that helps people with disabilities appears to be a long-term solution, trustees said.
Medicare’s finances also improved somewhat last year, thanks to a strong economy and lower-than-expected spending. Still, the program, which provides health care to about 67 million people, is expected to face a funding shortfall in 2036.