Massive cuts are predicted for U.S. Social Security

Posted Sept. 19, 2023

The winner of the 2024 presidential election will face a Social Security trust fund rapidly approaching insolvency, an independent U.S. budget policy group says.

The organization predicted a 23 percent cut in Social Security retirement benefits by 2033 when the federal fund for that purpose becomes insolvent, it said. This would mean annual benefits would be cut by $17,400 for a typical newly retired dual-income couple, it added.

The organization is the Committee for a Responsible Federal Budget, which describes itself as a nonpartisan, non-profit organization committed to educating the public on issues with significant fiscal policy impact.

Many U.S. retirees depend in whole or part on U.S. Social Security benefits.

The U.S. federal government pays for the program with a 12.4 percent assessment on workers’ salaries, shared 50–50 with employers. Since 2010, as the U.S. population has aged, The fund for benefits had paid out more than it has taken in.

“As the 2024 presidential campaign ramps up, candidates are facing pressure to pledge not to touch Social Security,” said the organization. “While this pledge is framed as ‘protecting benefits,’ it is — in reality — an implicit endorsement of a 23 percent across-the-board benefit cut in 2033.

Upon insolvency, the law mandates that the Old-Age and Survivors Insurance trust fund can only spend in amounts equal to incoming trust fund revenue, which means that all 70 million retirees, dependents, and survivors — regardless of age, income, or need — will see their benefits cut by 23 percent.

The organization said it estimates that a typical dual-income couple retiring in 2033, would see an immediate $17,400 cut in current dollar annual benefits and a typical single-income couple would see an immediate $13,100 cut for .

The cuts would differ for couples at different income levels, it said. A low-income, dual-income couple retiring in 2033 would see a $10,600 cut while a high-income, dual-income couple retiring in 2033 would see their annual benefits slashed by $23,000, it estimated.

Although the cut for a low-income couple would be smaller, it would represent a larger share of their income — and so senior poverty would rise significantly upon insolvency, it said.

The organization is not well-known to the public. It said that its bipartisan leadership comprises some of the nation’s leading budget experts, including many past heads of the U.S. House and Senate Budget Committees, the Congressional Budget Office, the Office of Management and Budget, and the Government Accountability Office.

Social Security was created during the Franklin Roosevelt Administration in the 1930s mainly as a retirement program. Since then additions to the program has included the disabled and the extensive Medicare health and hospitalization program. More recently immigrants and refugees have benefited from the program.

More information is available here: https://www.crfb.org/blogs/retirees-face-17400-cut-if-social-security-isnt-saved

Note: This article, now slightly modified, appeared first in A.M. Costa Rica, that nation’s capital city English-language daily newspaper.