Seniors Should Brace for Bigger Social Security Benefit Cuts

Social Security is facing a severe funding shortfall, and retirees are going to bear the brunt of this deficit.

According to an article by AL.com, previous projections predicted that Social Security would be unable to pay full benefits by late 2032. Experts said benefits would likely be cut by as much as 24 percent, which would equate to about $500 less per month.

But a new report by the Congressional Budget Office warns that Social Security is nearing insolvency. It predicts benefit cuts will likely be 26 percent, increasing to 40 percent by the end of the century. A 26 percent cut would equal an average reduction of $542 a month.

To understand why this is happening, you need to understand how Social Security is funded, and that’s through dedicated payroll taxes and taxes on benefits. The article by AL.com explains, “For the past 16 years, Social Security has paid out more than it has taken in, forcing it to dip into trust fund reserves to cover benefits. By law, Social Security can’t pay out more in benefits than it receives in revenue, so once the trust fund is gone, cuts will follow.”

The Seniors Trust is committed to improving the well-being of older Americans. We are doing that financially by encouraging lawmakers to enact the Social Security Expansion Act. This landmark piece of legislation will ensure the long-term solvency of the Social Security program, give retirees an immediate increase of about $200 a month in benefits, and establish a fair annual COLA.