Millions of Retirees Face Social Security Check Cuts – Exact Amount Revealed

Social Security is getting close to a big financial problem that could mean big cuts in benefits for about 70 million Americans. The Committee for a Responsible Federal Budget (CRFB) did some research and found that if the system isn’t fixed by 2033, the average couple could see their payouts drop by $16,500 per year. Also, the perks of a single worker with a middle-class income might go down by $8,200 a year. The Social Security system’s trust fund is expected to run out of money in 2033, and this analysis suggests that it isn’t fixed before then. But a lot of experts think that politicians probably won’t let those cuts happen because it would be bad for both parties’ politics.

The Old-Age and Survivors Insurance (OASI) Trust Fund, which holds most of the money for Social Security, has $2.6 trillion in it right now. This cash is used to pay for program costs and perks. However, Social Security now spends more on benefits than it brings in in taxes. This is partly because so many baby boomers are leaving. To meet its responsibilities to retirees, the agency is taking money out of the trust fund. According to the CRFB, this trust fund will run out of money by 2033 if nothing is done. This will cause recipients to receive 21% less each month. These cuts would affect everyone who gets benefits, no matter what their income is or if they are married.

How the cuts will affect people who get Social Security

This possible cut could be especially bad for seniors, especially those who are already having a hard time with money. In fact, 4 out of 10 seniors live on Social Security alone. Each month, they get an average of $1,907 from it. Shannon Benton, executive director of the Senior Citizens League, was worried about what these changes would mean. She said, “The result would likely lead to a spike in poverty rates for older Americans.” Low-income Americans are less likely to save for retirement than high-income Americans, so they often depend on Social Security more in their later years.

This problem could make Social Security less stable the longer politicians don’t do something about it. The CRFB’s policy head, Chris Towner, warned of what would happen if things were put off, saying, “There is a cost of waiting to fix the program.” It could be fixed right away by raising taxes by 27% or cutting benefits for everyone by 21%. If we wait, the tax hike would rise to 32% and the cut would fall to 25%.

Even with these problems, a lot of Americans still don’t understand what it would mean for Social Security to become insolvent. Eight out of ten people polled by Gallup are afraid that Social Security “won’t be available” when they are old enough to get it. The head of the lobbying group Social Security Works, Nancy Altman, made it clear that this is not the case. The program will still be able to pay out about 79% of guaranteed benefits because payroll taxes will continue to pay for it even if the trust fund runs out. Altman made it clear that “the program will not disappear.” He also said that the possibility of going bankrupt is a “action-forcing event” that should make Congress take action. People who are retired would still get checks, but they would be worth only 79 cents on the dollar.

Altman and other people think it’s unlikely that benefits will be cut by a lot. “It’s impossible to imagine that Congress wouldn’t do something.” People would be so angry that they would turn out every single member of Congress.

To make Social Security stronger, many ideas have been put forward, such as raising taxes, cutting payments, or doing a mix of the two. Both Vice President Kamala Harris and former President Donald Trump have said they will protect Social Security, but neither has given specifics on how they plan to deal with the system’s impending bankruptcy. Benton from the Senior Citizens League said, “The Senior Citizens League would like to know what the presidential candidates would do, if elected, to deal with the looming insolvency issue.” This made things more clear.

Trump has said that he wants to get rid of income taxes on Social Security payments. Experts, on the other hand, say that this plan would make the program’s finances worse because those taxes directly pay for benefits now. They are important because without them, Social Security benefits could be cut even faster than expected.

Some politicians, on the other hand, want to raise the income limit for Social Security taxes. People with incomes above $168,600 don’t have to pay the payroll tax right now. This means that workers with lower and middle incomes pay most of the costs for the program. Some Republicans also want to raise the retirement age to 70, saying that people should work longer since they are living longer. But a lot of Americans have to retire younger because they get sick or lose their jobs. Altman and other experts say that the system should not only be stabilized, but the benefits should also be increased. They say that the current benefits may not be enough for many seniors to be truly financially secure.