I have been reading that by 2035 Social Security benefits will be reduced if we do not do anything to fix the problem. I always wonder how much of this is hyper-political and how much is true.
I figured I would research and see if I can find out some answers to this question. And if so, what can be done to fix the issue.
The main reason I found when asking the question “why is social security going to be solvent by 2025” is the number of Americans 65 and older will increase to more than 78 million, from roughly 56 million in 2023.
Since more people will be taking money out of social security, there will be fewer people paying into it. That does not mean the system will run out of money completely. It does mean payroll taxes are expected to cover only around 78%. Simple math, to cover the gap, either payroll taxes will need to increase, or benefits decrease or both. Decreases in benefits are estimated to be reduced as high as 24% from 2022 standards.
What can be done to fix the problem?
On the Social Security website SSA.gov/solvency Office of the Chief Actuary lists proposals to change social security programs or the SSI. Some of these included: increase the age to receive social security, evaluate and modify the career-average-earnings years / quarters necessary to qualify for benefits, eliminate the maximum taxable benefits and provide credit for additional earnings taxed, to name a few.
In Forbes article No, Social Security Isn’t Bankrupt. But It is Struggling, Here’s Why author Taylor Tepper outlines how social security works, and why it is struggling. For anyone interested in knowing more details, I suggest reading his article. He explains in clear language how social security works and what happens if the perceived fund runs out of money.
What are the American people willing to do to correct this issue:
CNBC highlighted in their article the University of Maryland Program for Public Consultation 7 things both Democrats and Republican voters are willing to stomach to fix the Social Security issue.
These include:
1) Raising the Social Security payroll tax cap,
2) Reduce benefits for higher Earners.
3) Gradually raise the retirement age,
4) Increase payroll taxes,
5) Raise the minimum benefits,
6) Change the cost-of-living adjustments calculations,
7) Increase benefits for beneficiaries over the age of 80,
Not all these things directly reduce the amount of money pulled from the system. Some would cost the system more, but in the long-haul. Implementing these changes would create a healthier social security system, which will benefit all Americans.
Now is the time for Congress to act. They need to address the problem NOQ! Stop playing politics with our future and come to the table to help struggling Americans now and in the future.
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