Social security retirement benefits set to run dry by 2033 without Congressional action
The Social Security fund is projected to run out of cash by 2033 unless steps are taken to correct the program.
The Social Security trust fund could likely run out of cash by around 2033, according to a report released Wednesday by the program's trustees. The consequences of this measure for citizens would be a significant reduction of approximately 23% for the 60 million retirees in the United States.
It should be noted that this change is due to two specific reasons. First, the expiration date is moved forward by nine months compared to last year. The second is the new law that benefits nearly 3 million former public workers in the United States. These two factors do not include the influence that is causing the estimates to fall in wages and birth rates.
Boomer retirements strain social security as fund set to cover only 77% by 2033
Currently, there are more than 11,000 baby boomers who have reached retirement age. This increases the demand for benefits, while younger workers pay less taxes and, consequently, creates an imbalance between contributions and payments. This threatens the program's balance. Therefore, when the fund is depleted, the total payroll will only be able to cover 77% of beneficiaries, creating a significant problem for retirees in the United States.
Furthermore, it should be noted that disability payments are solvent until 2099, but if the United States Congress approves combining both funds, this would only last until 2034. After that date, the program's benefits would immediately be reduced by 19%.
Trustees urge action as social security faces 23% cut by 2033 without tax hikes or benefit reforms
The trustees comment that increasing Social Security revenue is mandatory to avoid drastic future measures for American society. They also propose solutions such as raising taxes, cutting benefits, or even combining both measures. They propose that this change be implemented as soon as possible so that citizens can prepare in advance for any adjustments that may occur in the system.
The report also indicates that the main projections and solutions that could be considered are the following:
- 2033: The retirement trust fund will be depleted if there is no congressional intervention.
- 23% reduction: Benefits would be automatically cut when the fund is depleted.
- Solvent Disability: The disability payment fund would remain stable until 2099.
- Funding Combination: Solvency could be extended until 2034, albeit with a 19% cut.
- Possible Solutions: Increase taxes, reduce benefits, or implement a gradual combination of both.
