Social Security: Cuts to $324 per month if Congress does not act

(NewsNation) – Social Security recipients could see their benefits cut by hundreds of dollars a month in roughly a decade unless Congress makes changes.

The top actuaries for Social Security and Medicare testified before the GOP-led House Budget Committee on Thursday and revealed the impending bankruptcy situation.

The combined trust funds that Social Security relies on to pay benefits are expected to be depleted in 2035. At that point, only 83% of benefits would be payable. As of January 2024, the average monthly benefit is $1,907, so a 17% reduction would reduce the typical check to $1,583 — $324 less per month or $3,888 per year.

Why are funds running out?

The trust fund specifically dedicated to retirement benefits is projected to be depleted even earlier, in 2033. When that happens, beneficiaries will see their benefits automatically cut by 21% unless Congress takes action .

“Social Security benefits beyond the benefits available in trust funds are not permitted, 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 solve the problem, but officials warned that the challenge becomes more complicated if lawmakers kick the can down the road.

“Delaying a response means there has to be a more dramatic response later,” said Paul Spitalnic, chief actuary for the Centers for Medicare and Medicaid Services.

What can Congress do?

This year, an average of almost 68 million people will receive a Social Security benefit each month, and by 2035, the number of Americans age 65 and older will reach 75 million.

Congress can address the funding dilemma by either increasing the program’s revenue through higher payroll taxes or by cutting benefits. Even the legislators have not agreed.

“Democrats may have some of their own ideas about how to address our rapidly deteriorating fiscal health, and Republicans may have their own, but we must all recognize that the situation we face is unsustainable and something must happen,” House Budget Committee Chairman Jodey. Arrington (R-TX) said in his opening remarks.

The committee has approved 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 has yet to go to the House of Representatives.

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’s bankruptcy was just months away.