Current:Home > InvestSocial Security checks face $17,400 cut if program isn't shored up, study says-LoTradeCoin
Social Security checks face $17,400 cut if program isn't shored up, study says
View Date:2024-12-23 15:50:58
Social Security is on track to cut benefits to retirees in 2033, when its trust fund reserves are forecast to be depleted. The reduction could be substantial, according to a new analysis.
Unless the program is shored up before 2033, the typical newly retired, dual-earner couple will see their Social Security checks reduced by $17,400 annually, or $1,450 per month, according to the report from the nonpartisan Committee for a Responsible Federal Budget.
A newly retired couple with one earner would see a cut of $13,100, the report said. The analysis, which is based on current dollars, doesn't forecast the impact on newly retired single earners, but the Social Security Administration has estimated that benefits will be cut by 23% in 2033 unless the program is strengthened.
Those cuts could prove devastating to roughly 50 million older Americans who receive Social Security checks, with the Committee for a Responsible Federal Budget forecasting that "senior poverty would rise significantly upon insolvency." Still, there are plenty of proposals to fix Social Security's looming funding shortfall, either by raising taxes or increasing the retirement age, or a combination of the two.
The current average monthly benefit check for single earners is about $1,800, according to the Social Security Administration.
"Smash the cap"
Some Democratic lawmakers and left-leaning policy experts say there's a simple fix: "Smash the cap," which refers to the Social Security tax cap.
That cap, a feature of the program since its start in the 1930s following the Great Depression, means that any income over that level isn't subject to the Social Security payroll tax, which is 6.2% for workers and an additional 6.2% for employers. In 2023, the tax cap stands at $160,200, which means any income above that amount is exempt from the payroll tax.
But critics say this places the burden of funding Social Security on low- and middle-income earners, while higher-income Americans get a break. For instance, a middle-income worker earning less than the $160,200 cap in 2023 will pay an effective tax rate that is six times higher than that of a millionaire.
Eliminating the cap would subject higher earnings to payroll tax, generating additional revenue for Social Security and helping to stabilize its finances, proponents say.
Raise the retirement age
Some Republican lawmakers and right-leaning experts are opposed to higher taxes, however, and instead have proposed raising the retirement age.
Last year, some Republican lawmakers floated the idea of lifting the retirement age to 70 — from its current age of 66 to 67, depending on one's birth year — citing the "miracle" of longer life expectancies.
Yet critics point out that many people can't work until they are 70, due to health issues or other reasons. And even if an older worker could remain in the labor force until they were 70, it still would amount to a benefits cut because they would be losing between three to four years of Social Security checks as a result.
- In:
- Social Security
veryGood! (11121)
Related
- 10 Trendy Bags To Bring to All of Your Holiday Plans
- How Kyle Richards, Teresa Giudice and More Bravo Stars Are Celebrating the 2023 Holidays
- Wisconsin university regents reject deal with Republicans to reduce diversity positions
- What is the Universal Declaration of Human Rights, which is marking its 75th anniversary?
- Bo the police K-9, who located child taken at knifepoint, wins Hero Dog Awards 2024
- At COP28, sticking points remain on fossil fuels and adapting to climate as talks near crunch time
- 8 last-minute dishes to make for a holiday party — and ones to avoid
- Wisconsin university regents reject deal with Republicans to reduce diversity positions
- Guns smuggled from the US are blamed for a surge in killings on more Caribbean islands
- Vikings offensive coordinator arrested on suspicion of drunken driving
Ranking
- Pentagon secrets leaker Jack Teixeira set to be sentenced, could get up to 17 years in prison
- Homes damaged by apparent tornado as severe storms rake Tennessee
- US vetoes UN resolution backed by many nations demanding immediate humanitarian cease-fire in Gaza
- Zimbabwe holds special elections after court rules to remove 9 opposition lawmakers from Parliament
- Justice Department says jail conditions in Georgia’s Fulton County violate detainee rights
- A pregnant Texas woman asked a court for permission to get an abortion, despite a ban. What’s next?
- Expert witnesses for Trump's defense billed almost $900,000 each for testifying on his behalf at fraud trial
- Eagles security guard DiSandro banned from sideline for Sunday Night Football vs. Cowboys
Recommendation
-
Joey Graziadei Details Why Kelsey Anderson Took a Break From Social Media
-
Thousands demonstrate against antisemitism in Berlin as Germany grapples with a rise in incidents
-
Thousands of revelers descend on NYC for annual Santa-themed bar crawl SantaCon
-
Amazon says scammers stole millions through phony product returns
-
These Yellowstone Gift Guide Picks Will Make You Feel Like You’re on the Dutton Ranch
-
Alo Yoga's 40% Off Sale Has Bras Starting at $34 & We Can't Click Fast Enough
-
Wisconsin university regents reject deal with Republicans to reduce diversity positions
-
Death of last surviving Alaskan taken by Japan during WWII rekindles memories of forgotten battle