According to THE SUN, As over 70 million Americans depend on Social Security (SS) benefits, concerns about the program’s future are rising. According to the Social Security Administration’s annual trustees report, trust fund reserves used to pay SS benefits could run out by 2035.
What Happens After 2035?
While Social Security won’t vanish, beneficiaries might only receive 83% of their full benefits if no additional funding is secured. This potential reduction has increased anxiety among current and future retirees, especially those who rely on SS as their primary income source.
How Social Security Is Funded
Social Security is mainly funded through payroll taxes, with employees and employers each contributing 6.2% of an employee’s wages, totaling 12.4% on earnings up to $168,600 in 2024. This money helps pay benefits to current retirees, rather than being set aside for each individual.
Approximately 85% of payroll tax dollars go into the Social Security trust fund, while the remaining 15% supports a fund for people with disabilities and their families. However, as more retirees collect benefits and fewer workers contribute, a funding shortfall looms.
Expert Insights on the Crisis
Shannon Benton, Executive Director of the Senior Citizen’s League, expressed concerns in an interview with The U.S. Sun. “Americans should be concerned about their nest egg,” she stated, emphasizing that relying on simple promises, such as eliminating taxes on Social Security or avoiding benefit cuts, won’t secure the program’s future. Benton stressed that voters need clear plans from presidential candidates on how they will address this impending shortfall.
Importance of Social Security for Retirees
For many retirees, Social Security is a vital part of their financial support, supplementing personal savings and retirement plans like 401(k)s or IRAs. About half of all seniors receive at least 50% of their income from SS, according to the Center on Budget and Policy Priorities.
A 2024 AARP survey found that 90% of Americans aged 50 and older consider Social Security “very important” to their financial future, highlighting the program’s significance across the political spectrum.
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Annual Adjustments and Increases
Social Security benefits include a yearly Cost of Living Adjustment (COLA) to help maintain beneficiaries’ purchasing power. The COLA is based on changes in the Consumer Price Index from the third quarter of the previous year to the same quarter of the current year.
For 2024, the COLA is set at 3.2%, resulting in an average increase of $55 per check for around 67 million Americans. This adjustment began with December 2023 benefits, paid out in January 2024.
“The last time Social Security faced this type of deficit, Congress responded with bipartisan legislation.”
Shannon Benton
Legislative Action Needed
Addressing the Social Security funding shortfall requires legislative action. Benton noted, “The last time Social Security faced this type of deficit, Congress responded with bipartisan legislation.” However, today’s lawmakers need to present clear plans. “It’s not enough to promise not to cut benefits — we need concrete proposals to protect the system for the next generation,” Benton emphasized.
Urgency to Secure the Program’s Future
With trust fund reserves projected to run out by 2035, the future of Social Security is uncertain. Congressional action is essential to ensure retirees receive their full benefits, but the path forward remains unclear. As Benton put it, “We’re looking at a system that, while still functional, is in need of serious repairs.”
Potential solutions might involve raising taxes, adjusting benefits, or a combination of both. The future of Social Security is an issue that can’t be ignored, as millions of Americans’ financial stability depends on it.
Upcoming Payments
The deadline to receive September 2024 Social Security checks is approaching. Find out how much you’ll receive and why. Additionally, beneficiaries will receive two checks in November before the end of the year—stay informed about the exact payment dates.
