Retirees will lose $17,400? Yes, if the fund is not strengthened

According to a new report from the nonpartisan Committee for a Responsible Federal Budget (CRFB), the average retiree couple would see $17,400 in Social Security cuts in 2033 if the program continues on its current path.

A CRFB analysis found that promises by politicians not to move the program would actually ensure benefits cuts across the board when the trust fund behind Social Security defaulted within a decade.

This fund, the Old-Age and Survivors Insurance (OASI) trust fund, is expected to run out of reserves by 2033, when people who are currently 57 years old will retire at 72.

According to the analysis, when OASI becomes insolvent, it will only be able to pay out an amount equal to the amount it receives in funding, which means a 23% reduction in social security benefits.

This would mean an annual loss of $17,400 for a typical dual-income couple and $13,100 for a single-income couple. These figures differ for low income ($10,600 / $7,900) and high income ($23,000 / $17,300).

The authors point out that these figures are in current dollars, and after adjusting for inflation, low-, middle- and high-income couples would face cuts of $8,500, $14,000 and $18,500, respectively.

“While the cut for a low-income couple would be smaller, it would represent a larger proportion of their income – and therefore senior poverty would increase significantly in the event of insolvency,” the report said. “Every 2024 presidential candidate who promises not to touch Social Security is implicitly supporting a 23 percent cut in benefits for 70 million retirees when the Social Security pension fund defaults in just a decade.”

Several options are available to keep the program healthy: raising taxes, raising the eligibility age, cutting costs, or relying more on general revenues to cover the funding gap, which could mean higher budget deficits or potential cuts to other programs.

All options are politically controversial.

MS

Source: kron4.com