In more alarming news about the state of Social Security, some experts are warning that up to 20% in payment cuts could come as early as 2032, per CNN unless Congress steps in with measures to preserve funding for the program.
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Up to 66 million people currently receive benefits, with the average coming in at about $1,691, according to January 2023 data from the Social Security Administration (SSA). Cuts of 20% would see payments shrink to $1,352, reversing progress made to increase benefits through cost-of-living adjustments (COLAs), the latest of which came earlier this year and increased payment amounts by 8 .7%. More than half of retirees themselves say that higher adjustment is not enough to get by, as GOBankingRates reported.
Social Security has been the subject of debate in recent weeks as the United States hit its debt ceiling. Despite accusations that politicians are poised to target the program for budget cuts, both President Joe Biden and House Republicans have vowed not to touch Social Security as they battle over national spending.
Both Biden and Sen. Joe Manchin have proposed raising taxes — and the cap on what the wealthiest Americans pay into the Social Security system — to ensure the longevity of Social Security.
Social Security could become insolvent as early as 2033 to 2035, according to the Committee for a Responsible Budget (CFRB), citing Congressional Budget Office (CBO) data. There are a few reasons for this, as reported by CNN: People are living longer, which means they need benefits for a longer period of time and work fewer years, which affects the cash flow coming in. The scenario creates a “ballooning number of beneficiaries,” according to CNN. Insolvency would mean a significant reduction in benefits: “CBO estimates that benefits would automatically be cut by 23 percent across the board in insolvency,” the CFRB suggested.
The last time Congress carried out a major overhaul of Social Security was in 1983 (48 years after its official launch in 1935). In 1983, Congress raised the full retirement age from 65 to 67 and increased payroll taxes on American workers.
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Those two measures are also being considered as possible remedies in 2023, when some lawmakers are pushing for a full retirement age of 70 and proposing an increase in taxes. President Biden is set to deliver his budget proposal this week — and it’s almost guaranteed that funding for both Social Security and Medicare will be on the agenda.
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This article originally appeared on GOBankingRates.com: Social Security: 20% Cut to Your Payments May Come Sooner Than Expected