Social Security benefits will be cut by more than $16,000 for a retired couple in 2033 if the program is left as is, according to a new report.
In its annual report on Social Security, the bipartisan Committee for a Responsible Federal Budget (CRFB) said that as Social Security will deplete in 2033, a retired couple will receive $16,500 less per year in Social Security benefits than they do today.
The CRFB estimated that in 2033, when Social Security taps out, all retirees will see an average 21% reduction in Social Security benefits.
Even for retirees who receive the minimum amount, it will be $10,000 less for couples and $7,000 less for individuals.
The CRFB noted that recent tax cuts proposed by presidential candidates could further accelerate the depletion of the fund. While both Vice President Kamala Harris and former President Donald Trump have spoken about protecting Social Security, they have not mentioned how to practically stop the depletion of Social Security. CRFB strongly criticized Trump’s proposed tax exemption for Social Security, saying it would deplete the system even faster and make the situation much worse.
According to the American Academy of Actuaries (AAA), the only way to avoid depletion without reducing benefits is to increase taxes. The AAA emphasized that a 25% increase in Social Security taxes would prevent a reduction in benefits. However, it added that a the number is unrealistic, so taxes would have to be raised and benefits reduced.
Adding to the seriousness of the situation is the fact that other government organizations besides the CRFB have recently predicted that Social Security will run out of money within a decade. The Social Security Administration (SSA) projected in its annual report that the fund will run out of money by 2035. That’s a year later than the 2034 projection in the 2023 report, but it’s still worrisome. Medicare funding is also expected to run out in 2036, the report added.
The situation is creating a sense of crisis among taxpayers and retirees. According to a survey released by the Nationwide Retirement Institute (NRI), 72% of taxpayers predict that social security will be run out in their lifetime, with Gen Xers (ages 44-59) and Millennials (ages 28-43) at 79% and 77% respectively.
Experts agree that Social Security needs to be reformed swiftly. “We only have about 10 years to fix the problem,” said retirement expert Burt Williamson, who urges us to look to history. In the early 1980s, during the Reagan administration, there was concern that Social Security would run out of money, and President Reagan formed a bipartisan commission to come up with a variety of solutions.
BY WONHEE CHO, HOONSIK WOO [cho.wonhee@koreadaily.com]
