A snapshot of the program's health and financial status can be found in the SSA's Board of Trustees report. Information about when benefits might be cut is also included.
There are some good and bad news about your Social Security benefits.
The image came from the same source as the one above.
The good news is that the SSA still expects to reduce benefits. Social Security benefits are mostly funded by payroll taxes, but in recent years they have not been enough to cover the entire program.
There is more money flowing out of the system in the form of benefits than there is coming in from payroll taxes because there are so many baby boomers retiring. SSA pays out more in benefits as retirees live longer
The SSA has been using its trust funds to cover the deficit The most recent report says that the funds will run out by 2034. Almost all of the projected benefits will be covered by the money coming in from payroll taxes.
If lawmakers can't find a solution to this problem by 2034, your future benefits could be cut in half.
The situation has not worsened despite a 23% benefit cut. The SSA raised concerns over the past two years that the trust fund could be in danger. Many older Americans were forced to retire early due to the Pandemic and younger workers were unable to work.
There was more money being paid out in benefits, as well as less income coming in from payroll taxes. It was feared that the benefits would be slashed sooner than expected or that they would be more drastic.
In its most recent report, the SSA states that it does not believe the Pandemic will have a net effect on its projections. It expected benefits to be reduced up to 24% by 2033.
It's not known if Social Security benefits will face cuts. Retirees may not need to worry about benefit reductions because there is a chance that a solution can be found before 2034.
It is wise to prepare for the possibility of cuts. Are you able to increase your savings even slightly? A healthy nest egg can help cushion the blow if benefits are slashed.
If you haven't begun claiming benefits yet, you may want to delay them. If benefits are reduced in the future, waiting a year or two to file for Social Security can result in collecting hundreds of dollars more a month.
If you are already retired, be prepared for possible benefit cuts. If you rely a lot on Social Security, it's a good idea to cut back on your spending or get some part-time work. Keep an eye out for these changes over the next decade or so.
Social Security is not going away completely despite benefit cuts. You will be prepared no matter what happens with your benefits if you know how the program can change.
All Rights Reserved © 2024
