Americans face a grim future with Social Security as it will severely lack funds in the next ten years, earlier than anticipated.
What’s Going to Happen to Social Security?
Lawmakers must act quickly to address Social Security’s financial deficit to prevent a reduction in Americans’ checks.
A government report released on Friday indicates that the Social Security retirement fund may exhaust its funds by 2033, one year earlier than previous projections. The board of trustees’ yearly report forecasts that the program will be unable to cover 100% of benefits in approximately ten years.
Without significant revisions to the entitlement program by 2034, approximately 66 million Americans may experience a benefit decrease ranging from 23% to 25%.
According to the report, the Old Age and Survivors Insurance Trust Fund, responsible for retired individuals’ benefits, will be capable of providing complete payments until 2033, one year earlier than earlier projections.
Afterward, the program can only distribute 77% of the planned benefits.
Trust Fund Can Only Meet Medicare Benefits Until 2031
The report demonstrates that Medicare’s hospital insurance trust fund, known as Part A, will face a more substantial financial deficit in the upcoming years.
The report highlights that the trust fund can only meet the scheduled benefits entirely until 2031, which is three years later than the previous forecast.
By that time, the report states that the reserves of the fund will be exhausted, and program income will be enough to pay 89% of the complete scheduled benefits. This circumstance could lead to an 11% cut in payments to healthcare providers.
Social Security and Medicare have become a hot-button political issues over the past few months amid a broader battle over the budget and debt ceiling.
In his proposed 2024 budget, Biden included a plan to shore up Medicare’s finances through at least 2050 by increasing taxes on wealthy Americans and bringing down drug costs.
Despite this, President Biden’s budget did not include a comparable strategy for addressing Social Security.
Experts who spoke to ABC News say if he intends to uphold his promise of not reducing benefits or raising taxes for those earning less than $400,000 annually, there are limited avenues for him to effectively strengthen the financial stability of Social Security.
Social Security and Medicare Concerns
“Social Security and Medicare are two bedrock programs that older American rely upon for their retirement security,” she said in a statement. “The Biden-Harris Administration is committed to ensuring the long-term viability of these critical programs so that retirees can receive the hard-earned benefits they’re owed.”
The White House estimated the floated changes would extend the Medicare trust fund by an additional 25 years, “beyond 2050.”
The proposals are unlikely to garner much support in a deeply divided Congress, and face almost certain rejection from Republicans who won control of the House last year.
The president did not address the looming Social Security insolvency in his budget.
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