From time to time, the Social Security Administration or an independent research firm forecasts when Social Security payment will start to drop. The assets of the asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Fund are managed by the Social Security Board of Trustees. The new forecast for when Social Security payments will be cut is 2034. (See why Social Security has already started to go away.)
Social Security payments would not be cut completely in 2034. They would go to 80% of the current level and continue to drop over time.
The only way current payments can stay in place for people collecting Social Security today and in the future is for Congress to act. Kilolo Kijakazi, Acting Commissioner of Social Security, wrote, “The Trustees continue to recommend that Congress address the projected trust fund shortfalls in a timely fashion to phase in necessary changes gradually.” He pointed out that the programs supported 67 million Americans.
It is hard to imagine what happens if Social Security payments are cut. Most qualified Americans find it is 100% of their retirement income. For others, it is a major supplement. Americans already part of the program have received full benefits for a year, and older people, sometimes for decades. People who retire at the start of the next decade may be given lower payments for the entire period they can collect benefits.
The impact of lower Social Security payments would be widespread and damaging to the economy. Some people who get benefits cut will fall into poverty. Others will have lower discretionary income than they believed they would. Lower discretionary income hurts the overall national economy because consumer spending is about two-thirds of GDP.
Congress has not acted on the matter because of a sharp divide that has existed for years and will persist. It is so deep it could last well beyond 2034. On one side is the argument that the government cannot pay the costs of what would be billions of dollars in expenses to supplement the Social Security fund as it diminishes. On the other side is the argument that older Americans should not see their incomes drop in their most vulnerable years economically. The cost, these people say, is worth the benefit. (This is what it costs to comfortably retire in every state.)
Could the debate over what happens to Social Security last beyond 2034? Unfortunately, the answer is yes for those with retirement payments online.
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