The findings arrive as lawmakers debate proposals aimed at strengthening Social Security’s finances. With more than 70 million Americans receiving benefits, the program remains a primary source of retirement income for millions of households across the United States.
The latest projections focus on Americans who are now 61 years old and are expected to reach full retirement age around the time the Social Security retirement trust fund is projected to run out of reserves. According to the Committee for a Responsible Federal Budget (CRFB), a nonpartisan think tank, the financial impact would differ depending on a retiree’s income level, work history and marital status.
Annual Losses Would Differ by Household Income
According to the Committee for a Responsible Federal Budget, a newly retired dual-income couple with middle earnings could lose about $16,900 in Social Security benefits each year if the retirement trust fund is exhausted in late 2032 and Congress takes no action.
The report estimates that a dual-income, low-income couple would face an annual reduction of about $10,200. A high-income dual-income couple, meanwhile, could see yearly benefits fall by about $22,300.
The CRFB notes that while lower-income households would lose less money in absolute terms, those reductions would account for a larger share of their total retirement income, making them more financially disruptive.
The organization also says the projected reductions would grow over time as the gap between Social Security’s costs and dedicated revenues continues to widen. According to the report, annual benefit cuts are expected to reach 35 percent by the end of the century if the funding imbalance remains unresolved.
The report adds that Social Security’s insolvency “is no longer a crisis for future lawmakers to deal with,” stating that senators elected this year are expected to be serving when the retirement trust fund reaches exhaustion. It also says retirees in every state would be affected if Congress does not act.
Trustees Continue To Project Trust Fund Depletion Early Next Decade
According to the Social Security Board of Trustees‘ annual report released in June, Social Security’s combined trust funds for retirement and disability benefits are projected to be unable to pay full scheduled benefits beginning in 2034. At that point, incoming revenue would be sufficient to cover about 83 percent of scheduled benefits.
The trustees project that the Old-Age and Survivors Insurance (OASI) trust fund, which finances retirement and survivor benefits, will be depleted during the fourth quarter of 2032. At that stage, the fund would be able to pay about 78 percent of scheduled benefits.
The OASI trust fund pays monthly benefits to retired workers, eligible family members and survivors of deceased workers. It is financed primarily through payroll taxes paid by employees and employers, while any surplus is invested in U.S. Treasury securities.
Those reserves have historically been used to make up the difference when benefit payments exceeded payroll tax revenue. In recent years, Social Security has paid out more than it has collected, requiring the trust fund to rely on its accumulated reserves, a trend identified by the trustees as a central element of the program’s long-term financing challenge.
Congress Weighs Proposals Aimed at Social Security’s Future
Lawmakers are considering several measures intended to address the program’s financial outlook.
Earlier this week, a bipartisan group of senators introduced the Protecting Retirement Opportunities and Maintaining Income Security for Everyone (PROMISE) Act. According to Newsweek, the legislation would establish a process requiring Congress to vote on a plan designed to restore Social Security’s long-term finances after years of legislative gridlock.
Senator Dick Durbin said in a statement that Congress has known about the funding challenge “for more than a decade” but has not addressed the politically difficult issues involved. He added that delaying action would make the issue harder to resolve in the future.
Durbin also said the bipartisan proposal would allow Congress to debate the issue “in a transparent, fair, and bipartisan way,” adding that lawmakers were elected to solve problems and that “there’s no greater problem than the solvency and future of Social Security.”
Another proposal under consideration is the reintroduced Social Security 2100 Act. The bill would replace the inflation measure currently used to calculate Social Security’s annual Cost of Living Adjustment with the Consumer Price Index for the Elderly (CPI-E), an experimental index that gives greater weight to expenses such as health care and housing.
The legislation would also increase Social Security benefits by 2 percent and establish a new minimum benefit equal to 125 percent of the federal poverty rate.
The Senior Citizens League (TSCL) has described the proposal as the “gold standard” for Social Security reform. Executive Director Shannon Benton said in a statement that while the measure is unlikely to pass in the current Congress, it “should,” adding that it would extend the program’s solvency by an additional 32 years while delivering many of the changes older Americans have sought.
