The Social Security Administration says it may run out of money in 2033. At that point, its management says the money it has available will be “sufficient to pay 79 percent of scheduled benefits.” Without an act of Congress, it is hard to say how this can be avoided. One solution is not paying people with high incomes or lowering their benefits.
24/7 Wall St. Key Points:
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The Social Security Administration says it may run out of money.
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The options to avoid this include reducing the benefits paid to affluent Americans.
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If Social Security is to be paid at current levels, in addition to cost-of-living increases, the options to keep benefits at 100% are small. One is to raise the age at which people can get benefits by two years. For those who want payments when they are 62, the age would be pushed to 64. Those who plan to get their benefits at 70 would have to wait until 72.
The Congressional Budget Office has raised an alarm about paying benefits later. In a new report, it calls Social Security payments a “promise we cannot break”
The Wealth Argument
So what choices are left beyond lowering payments or pushing out the age at which people can pay them? Former New Jersey Governor Chris Christie gave his opinion in a presidential debate in 2023. He said Social Security was created to support people with low incomes. The rich, like Warren Buffett, should not be paid at all.
The “rich” argument raises several questions and controversies. The first is whether the measure of the rich should apply to passive income or to what people make when they are working as they hit the age of Social Security payout. Buffett has a paying job, so he should not get money at all.
Another question is whether people who have high incomes should get reduced benefits instead of losing them completely. The IRS, most likely, would need to collect the appropriate income data. And the payouts from Social Security would be tiered.
High earners who want to fight back against the idea of eliminating or reducing benefits have a simple counterargument. They paid into Social Security, and often paid for decades. They should get that money back no matter how much they make.
Eventually, Congress has to decide, even if that decision is to do nothing. If they do nothing, payments to the rich will be unaffected.
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