A new study from the Congressional Budget Office forecasts that outlays for Social Security will top income paid into the fund in 2033. This is often called “running out.” In reality, it will be necessary to find a way for income above expenses then, or Social Security payments will begin to erode. Since this is the sole source of income for millions of Americans, the effects will ripple through the broader society.
The new research is titled “CBO’s 2022 Long-Term Projections for Social Security.” Its primary conclusion is “In CBO’s projections, spending on Social Security exceeds revenues to the program in 2022 and increases relative to GDP over the next 75 years, while revenues remain stable. If combined, the program’s trust funds would be exhausted in 2033.”
The picture is worse for people who will not retire for many years. If Social Security is underfunded, benefits for those in the system in 2033 will be 23% smaller than today. They would be 35% smaller for those taking benefits in 2096.
Get Our Free Investment Newsletter
There are two potential solutions to the problem. The first is to spend the balance of the money in the Social Security funds. This means the pool available for benefits would shrink each year. This, in turn, would put further pressure on payouts.
ALSO READ: Providence Is the Best City in America for Veterans
The other solution, which makes much more sense when retirees are taken into account, is to raise the amount people working today must pay into the fund by law. This is unpopular among most members of Congress because it is essentially a tax increase. Why confront voter resistance when the problem can be kicked down the road for more than a year before there are any consequences? That appears to be the most likely outcome at this time. In reality, 2033 is just around the corner.
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Source: Read Full Article
7 states where Social Security benefits are $100 (or more) above the national average
Halfords FY21 Profit Climbs, Proposes Dividend; Sees Higher Profit In FY22
Elon Musk says Tesla foiled Russian national’s cyberattack against factory
Why the Trump White House might end media sneak peeks for big economic reports
IRS to send stimulus checks to Social Security recipients this weekend after delay