In recent years, Social Security has been under threat of being cut, but, just how much and when the cutting begins seems to be drawing a lot of confusion for people. This confusion has been slowly been transpiring into fear as time goes on.
According to the April-released Social Security Board of Trustees report, the program won’t bring in enough revenue over the next 75 years to cover all neccessary expenses (beneficiaries, inclusive of cost-of-living adjustments, etc.)
First the good news…
Social Security is in no danger of disappearing or going bankrupt. Payroll tax and the taxation of benefits is a continuous source of funding for the program so it’s not being cut completely.
Now the bad news…
2 words: Funding shortfall
Basically, there is a shortage of funding in the tune of $13.9 trillion between 2035 and 2093. If this shortfall isn’t dealt with retired-worker benefits could decrease by 23%. Dealing with the shortfall can be solved by two widely acknowledged actions:
⦁ adding revenue
⦁ cutting expenditures
Currently, the full retirement age is set to peak in 2022 at age 67 for anyone born in 1960 or later, but a proposal has been brought into the light by the GOP that involves raising it to as high as age 70.
A higher full retirement age would require a worker to either wait longer to claim their full monthly benefit or accept a steeper permanent monthly reduction by claiming early (as early as age 62).
Overall, the future of Social Security is not as bleak as it once was presented through sensationalized press coverage but a possible 23% reduction in benefit payout amount and a increase in the retirement age to 70 shows that Social Security, in it’s current form, is not sustainable.