In this photo illustration, a Social Security card sits alongside checks from the U.S. Treasury on October 14, 2021 in Washington, DC. (Photo illustration by Kevin Dietsch/Getty Images)
Tens of millions of Americans will soon face significantly smaller Social Security payments if the U.S. government does not take steps to protect the program, and new research estimates just how much smaller those monthly checks could be.
Why you should care:
Social Security payments are already vital to so many seniors and make up a significant part of future retirement plans. For 16 years, though, the program has been paying out more to retirees than it has collected from the current workforce.
So far, the federal government has relied upon a trust fund to make up the difference and still pay older Americans their full benefits. However, that fund will only be able to pay 100% of the scheduled benefits for seniors and survivors until 2033, according to the Trustees of the Social Security and Medicare trust funds. After that time, those individuals would only receive around 77% of what was promised.
What they're saying:
The Committee for a Responsible Federal Budget crunched the numbers to determine which states would be most affected by the potential reduction in benefits (see map below), but it emphasized that every state would feel notable effects.
"No state would be spared from the potentially devastating effects of insolvency. With fewer than seven years until Social Security is projected to be insolvent, policymakers need to enact changes to the program as quickly as possible to protect against these scenarios," the organization's statement argued.
Dig deeper:
In eight states, the funding crunch would hit home for more than 1 in 5 residents, researchers found. They also pointed out that the difference for the average American would be significant, with the average monthly cut across the country being $500. Even in the state where the drop would be smallest, retirees would still see their checks shrink by $459 per month.
Social Security cuts by state
By the numbers:
Across the country, the looming cuts would affect over 60 million people, or 18% of the population, the organization reported. Extending the $500 average monthly drop to all of those Americans means the total cut would be approximately $345 billion, or 1.1% of the gross domestic product.
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The backstory:
The trust fund deadline identified by the trustees applied to those receiving Old-Age and Survivors Insurance. Their latest report indicated that the Disability Insurance Trust Fund is expected to pay its full amounts through at least 2099.
The Source: Information for this article was taken from the Committee for a Responsible Federal Budget and the Trustees of the Social Security and Medicare trust funds. This story was reported from Orlando.