There is not much time left to help the Social Security funds overcome the financial difficulties it will soon have. Despite the fact that all payments are on time and the Congress achieved a debt ceiling agreement, things may become worse.
The Social Security Administration has more than 70 million beneficiaries, so it is of vital importance that they deal with the lack of funds. Bear in mind that a recent report showed that the Administration may not be able to pay 100% of benefits a year earlier than expected.
The OASDI Trustees Report stated that there will not be enough money by 2034. Therefore, not all payments could be sent completely. That could imply beneficiaries may have to look for alternatives to the Social Security benefits.
This is what could happen to your Social Security benefits by 2034
Those workers who have invested wisely and saved enough money, may not rely so much on Social Security. However, those workers who have put all their eggs in one basket, SSA, may suffer the consequences.
Bear in mind that there could be cuts of about 20% in payments. This could be a big blow for those American families that need this monthly income. Living on a shoestring budget and getting a pay cut could be devastating.
How could Social Security avoid running out of money to pay benefits?
It will depend on what the Federal government decides, but there are plenty of proposals that could be taken into account. Obviously, many workers fear that there could be another increase in the Full Retirement Age.
The current Full Retirement Age is 67 if you were born in the 1960s. Getting more money from taxes is another way to help Social Security overcome financial difficulties.
For example, if the taxable maximum disappears, more money could boost the financial situation of SSA. In 2024, you will only have to pay taxes on up to $168,600 of your earnings. If you exceed it, you will not pay more taxes. CNBC claims that this would just cover 78% of the lack of money in 2034.
Then, other measures need to be taken. Another measure could be to pay more taxes as you work. If you are paying 6.2% to SSA, some experts claim it should be a little higher. Another possibility could be to tax things that have never been taxed.
For example, gifts, and estates are among the proposals experts suggest. Making Social Security benefits payments smaller for those who are high earners could help reduce the lack of cash too. Lower COLAs are also an idea. Hopefully, they can find ways to help millions of American beneficiaries.