Social Security’s trust funds are projected to run out of money by 2034, a year earlier than previously expected, according to a report released Wednesday (June 18) by the program’s trustees. If Congress does not act, benefits for over 60 million retirees and family members will be reduced by 23% after the funds are depleted. The change in the timeline is attributed to a new law that increased benefits for former public-sector workers and adjustments in assumptions about future wages and birth rates.
The demographic challenge is central to Social Security’s financial issues, with more than 11,000 baby boomers reaching retirement age daily, leading to fewer workers supporting the system. Currently, payroll taxes cover only about 77% of expected benefits, and once the trust fund is depleted, benefits will be automatically cut unless Congress intervenes.
The trustees’ report suggests that combining the trust funds for old-age benefits and disability insurance could extend solvency to 2034, but this would require legislative action. Congress has several options to address the shortfall, including raising taxes, cutting benefits, or a combination of both. The Social Security Fairness Act, enacted earlier this year, has already affected the depletion timeline.
As the situation develops, Congress faces pressure to act to prevent automatic cuts. The trustees also highlighted that Medicare’s trust fund faces similar challenges, with depletion expected in 2033. Both programs’ financial health is crucial for millions of Americans, and prompt action is needed to ensure their sustainability.
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