A typical newly-retired, dual-income couple could lose out on nearly $17,000 annually in Social Security benefits starting in 2033 if Congress does not take action to prevent the program from becoming insolvent, a new report warned.
By late 2032, when today’s 61-year-olds will hit the typical retirement age, the Social Security retirement program could be forced to reduce benefits by roughly 22%, according to the Social Security and Medicare Trustees.
If that takes place, a dual-earning, low-income couple would face a yearly cut of $10,200; a medium-income couple would see annual losses of $16,900; and high-income couples would lose as much as $22,300 each year, according to a report from the Committee for a Responsible Federal Budget.
While the size of the cuts is smaller for low-income couples, it represents a larger share of their total income – hitting them harder.
And the longer the program goes without a solution, the worse those cuts will get – growing to 35% by the end of the century, according to the report.
“Social Security’s insolvency is no longer a crisis for future lawmakers to deal with; senators elected this year will be in office when Social Security’s retirement fund is exhausted,” the committee said.
“Absent Congressional action, retirees in every state will be impacted. The time to act is now.”
Lawmakers have been under growing pressure to address the Social Security crisis, as the program supports more than 70 million Americans and remains the primary source of income for millions of retirees.
The Old-Age and Survivors Insurance, or OASI, trust fund – which pays benefits to retired workers and the families of deceased workers – is expected to become depleted in the fourth quarter of 2032, according to the report.
OASI is mainly funded through payroll taxes. But Social Security has been increasingly paying out more than it collects – forcing the trust fund to tap into its reserves – as the massive Baby Boomer generation retires, birth rates decline and American life spans increase.
Policymakers have put forth several proposals that attempt to avert the demise of Social Security.
Earlier this week, a bipartisan group of senators introduced the Protecting Retirement Opportunities and Maintaining Income Security for Everyone, or PROMISE, Act, which requires lawmakers to discuss and vote on a plan to extend Social Security’s solvency.
Congress also recently reintroduced the Social Security 2100 Act, which would increase payroll taxes on current workers and raise benefits for seniors by 2%.
Its proponents have argued it would extend the trust fund for another 32 years and give senior citizens more buying power amid sticky inflation.
Critics have argued the 2100 Act amounts to a bad deal for workers, raising the tax burden on employed Americans, specifically those making $400,000 or more, and that it fails to provide a long-term solution to the program’s insolvency.