Christian Smith
(NewsNation) – Social Security beneficiaries could see their benefits reduced by hundreds of dollars per month in about a decade if Congress doesn’t make changes.
Top Social Security and Medicare Actuaries testified before the GOP-led House Budget Committee on Thursday and laid out the impending insolvency situation.
The combined trust funds that Social Security relies on to pay benefits are projected to run out in 2035. At that time, only 83% of benefits would be payable. In January 2024, the average monthly benefit is $1,907, so a 17% cut would reduce the typical check to $1,583 – $324 less per month or $3,888 per year.
Why are funds running out?
The trust fund specifically dedicated to retirement benefits is expected to run out even sooner, in 2033. When that happens, beneficiaries will see their benefits automatically reduced by 21% if Congress does not take action.
“Social Security benefits beyond benefits available in trust funds are not permitted, much less required,” Steve Goss, chief actuary at the Social Security Administration, told the House panel.
Ten years may seem like a long time to solve the problem, but officials have warned that the challenge will become more complicated if lawmakers get the ball rolling.
“Delaying a response means a more dramatic response will be needed later,” said Paul Spitalnic, chief actuary at the Centers for Medicare and Medicaid Services.
What can Congress do?
This year, an average of almost 68 million people will receive a Social Security benefit every month, and by 2035, the number of Americans ages 65 and older is expected to reach 75 million.
Congress could resolve the funding dilemma by increasing program revenues through higher payroll taxes or by reducing benefits. Lawmakers didn’t agree either.
“Democrats may have some of their own ideas about how to deal with our rapidly deteriorating fiscal health, and Republicans may have their ideas, but we must all recognize that the situation we face is unsustainable and that something must happen,” he said. House Budget Committee Chairman Jodey. Arrington (R-TX) said in his opening remarks.
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The commission has approved a bill It would create a bipartisan fiscal commission to come up with policy recommendations for programs like Social Security and Medicare, but the plan has not yet been introduced to the House floor.
The last major Social Security reform occurred about 40 years ago, when the federal government gradually raised the eligibility age from 65 to 67. When this happened in 1983, Social Security’s insolvency was in just a few months.
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