Inflation has reduced the value of social security benefits to recipients.
But there will be further cuts in the long run.
Experts say the increasing needs of seniors are burdening small benefit reserves. Americans are living longer because of lower lifestyle risks. Life expectancy was 47 years in 1900 and it was 76 in 2021.
In 2023, seniors will see their social security payments increase by 8.7% (around $140 more per month). The 30-day payout will become $1,827. It is the annual cost-of-living adjustment (COLA) required by the national legislature.
Analysts predict this increase. Plus, declining new workforce contributions will cause social security cuts in 10 years. More than 150 million Americans identify as self-employed. Many companies, like Google, are also laying off staff.
Right now? About 70 million Americans depend on social security. In a decade, people could hear bad news about their monthly payments. The Congressional Budget Office expects drastic spending limitations for the Social Security Administration (SSA). It would mean no full payments by 2034.
Social Security Outlook
Currently, the $1,827 is lower than most seniors' rent. It is a struggle for people who depend on this benefit for food and housing expenses. A reduced payout plus inflation would make things harder for some older Americans.
A key issue is that officials are aware of this possibility. But there are no proposals to fix the problem within the 10-year window. What is causing the cash flow gap? More outflows than revenue received by the Old-Age and Survivors Insurance Trust Fund. The Disability Insurance Trust Fund has a few more years until exhaustion - 2048.
If the cash gap is not closed for retired claimants, in 2034, benefits will drop by 23%. The declining payout would keep falling each year until it reaches 35% by 2096.
Analysts say Congress would have to take action to correct the issue. The solutions are not pleasant. For example, working employees would give more contributions. But it is unclear if anything will get done soon. The two parties would need to take bi-partisan action.
Takeaway
Retirees who qualify will still get their social security payment. But the amount will be less than the previous generation received starting in 2034; if the underfunding issue continues.
Experts already note the payouts contributors get are barely enough to manage raising expenses.
Social Security benefits have lost 40% of their buying power since 2000 because of high inflation, according to a study, cited by CNN.
Credible Publishing Houses That Report: Social Security Benefit Cuts Coming
CBNC Select: Will Social Security run out of money? Here’s what could happen to your benefits if Congress doesn’t act
CBS News: Social Security benefits face reduction a year earlier than expected due to pandemic
Social Security Matters (Government Website): Social Security Funded Until 2034, and About Three-Quarters Funded for the Long Term; Many Options to Address the Long-Term Shortfall
AARP: How much longer will Social Security be around?
U.S. News Money: The Future of Social Security: Will Social Security's COLA Boost Mean Benefits Run Out Sooner?
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