In the past few months, lawmakers, financial experts, and the Social Security Administration have talked about how the final lack of funds in ten years will affect Social Security checks for all beneficiaries, especially retired workers in the US. A big worry is how Americans will live in their later years.
Some people are saving for retirement, and some have retirement plans through their jobs, but most people will depend on Social Security checks. There is, however, a secret risk that the money that the government uses to fund programs will run out soon.
A report from the Center on Budget and Policy Priorities says that almost 16.5 million people aged 65 and up depend on Social Security to make ends meet.
A Gallup poll found that 90% of retirees depend on their pensions to help pay some of their daily bills. Trust funds and assets that Social Security depends on could run out within the next ten years, which is a worry for the next group of seniors.
Annual reports from the Social Security Board of Trustees say that the government retirement system will have a $23 trillion shortfall in nine years. That doesn’t mean the trust funds will fail, even though it sounds scary. Social Security will still work, but starting in 2033, wages will have to be cut by a lot in order to keep making payments for many years.
Social Security checks for retirees are expected to become effective in 10 years
The Old-Age and Survivors Insurance Trust Fund (OASDI) is almost empty because of changes in population and a bad financial plan. This trust fund pays out to 5.8 million live beneficiaries and 51 million retired people.
Because of this, the government would have to cut wages by up to 21% in order to keep Social Security Disability Insurance (SSDI) going until it ends in 2098. In 2024, a retired worker will get $1,918.28 every month as a salary.
Experts say that this payment amount could go up by about 2.6% next year because of the cost-of-living adjustment (COLA). However, this number won’t be set until October at the end of the year. Read below to find out how much your monthly Social Security checks will go up if the 2.6% increase goes into effect.
This will help you understand how this yearly increase can affect your checks. Additionally, keep in mind that each type of Social Security payment has a different amount, which can be found here:
| Retirement benefits (plus 2.6%) | Survivor benefits (plus 2.6%) | SSDI benefits (plus 2.6%) | SSI benefits (plus 2.6%) |
| On average: $1,949
Age 62: $2,780 Age 67: $3,921 Age 70: $5,000 |
On average: $1,544
Individual: $1,819 2 Children: $3,748 |
On average: $1,577
Blind recipients: $2,657 Maximum payment: $3,921 |
On average: $716
Individuals: $968 Couples: $1,452 Essential person: $484 |
A 21% drop, on the other hand, would mean that $507.53 is taken out of each monthly check, leaving the worker with $1,909.26. It’s clear that this amount is even less than what a pension would be in 2024.
Possible solutions to avoid cuts in Social Security checks rely on a bipartisan agreement
The issue needs to be resolved by lawmakers, but it won’t be simple and will need backing from both parties. To pass any changes to Social Security law, the Senate has to vote 60 times. The main problem is that the parts of the Senate can’t agree.
Democrats want to tax wages over $168,000 a year that are not currently subject to payroll taxes. They also want to raise taxes on the rich. By putting off the current full retirement age of 67 years, Republicans want to make people pay into the Old-Age, Survivors, and Disability Insurance (OASDI) program and other similar funds for longer.
Lawmakers don’t agree on much, and neither plan is the best way to solve the problem. Also, while lawmakers argue, the best thing you can do is improve your retirement savings so that you get more Social Security checks.
Also See:- Update on 2025 cost-of-living adjustment: 2 difficulties for retirees with check increases