(NewsNation) — Social Security recipients could see their benefits cut by hundreds of dollars a month in roughly a decade if Congress doesn’t make changes.
The head actuaries for Social Security and Medicare testified before the GOP-led House Budget Committee on Thursday and laid out the looming insolvency situation.
The combined trust funds that Social Security relies on to pay out benefits are expected to be depleted in 2035. At that point, just 83% of benefits would be payable. As of January 2024, the average monthly benefit is $1,907, so a 17% cut would reduce the typical check to $1,583 — $324 less per month or $3,888 per year.
Why are Social Security funds being depleted?
The trust fund specifically devoted to retirement benefits is projected to be depleted even earlier, in 2033. When that happens, beneficiaries will see their benefits automatically cut by 21% if Congress hasn’t taken action.
“Social Security benefits beyond the available benefits in the trust funds are not allowed, much less required,” Steve Goss, chief actuary for the Social Security Administration, told the House panel.
Ten years may sound like a long time to resolve the problem but officials warned that the challenge becomes more complicated if lawmakers kick the can down the road.
“Delaying a response means that there needs to be a more dramatic response later on,” said Paul Spitalnic, chief actuary for the Centers for Medicare and Medicaid Services.
What can Congress do to prevent Social Security cuts?
This year, an average of almost 68 million people will receive a Social Security benefit each month, and by 2035, the number of Americans aged 65 and older is set to hit 75 million.
Congress could address the funding dilemma by either raising the program’s revenues via higher payroll taxes or trimming benefits. Lawmakers haven’t agreed upon either.
“Democrats may have some of their own ideas on how to address our rapidly deteriorating fiscal health, and Republicans may have their ideas, but we should all acknowledge that the situation that we face is unsustainable and something must happen,” House Budget Committee Chairman Jodey Arrington (R-TX) said in his opening remarks.
The committee has passed a bill that would create a bipartisan fiscal commission to come up with policy recommendations for programs like Social Security and Medicare but the plan hasn’t gone before the full House yet.
The last major Social Security overhaul came roughly 40 years ago when the federal government gradually raised the eligibility age from 65 to 67. When that happened in 1983, Social Security insolvency was just months away.
