What Do They Mean When They Say Social Security is Running Out of Money?

For years, we’ve been hearing that Social Security is “running out of money.” That sounds ominous.

According to an article by Moneywise, new projections from the Congressional Budget Office show that the Old-Age and Survivors Insurance (OASI) Trust Fund, from which retirement benefits are paid, would run out of money in 2032 if no action is taken. The report states that there will be “insufficient funds to pay, on a timely basis, the full amounts that OASI beneficiaries are entitled to under current law.”

It’s important to point out that the trust fund will not be empty. There will still be money available to pay benefits. However, the incoming income tax revenue will not be enough to pay all of the promised benefits. Experts say benefits could be cut by about 20 percent.

Counting on Congress

But benefits don’t have to be cut. It’s not too late for lawmakers to make changes to bolster Social Security. The article suggests possible solutions could involve raising taxes, cutting benefits, or both.

The Seniors Trust believes the best solution to solving the Social Security solvency issue has already been introduced. We want Congress to enact The Social Security Expansion Act. This landmark bill buttresses the long-term solvency of Social Security by expanding benefits for seniors – not cutting them.

If passed, this legislation will make four major changes to Social Security for retirees:

• Benefits will be increased for most recipients by about $200 per month.
• The Consumer Price Index for the Elderly (CPI-E) will be used to calculate Social Security Cost-of-Living Adjustments (COLAs) instead of the Consumer Price Index for Urban Wage Earners (CPI-W) used currently. The CPI-E takes the unique spending habits of seniors into account — particularly regarding the cost of healthcare — and offers a more realistic COLA for retirees.
• The minimum Social Security benefits would be increased to provide higher payments to seniors and greatly reduce senior poverty.
• The long-term solvency of the Social Security program would be guaranteed.