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Retirees Face a $17,400 Cut if Social Security Isn’t Saved
Your politicians are playing you for a fool. They ignore the fiscal status of Social Security for decades. Their only interest is positioning their party for the next election as the funding worsens. One party proposes an unimaginative increase in retirement age and the other calls it a cut in benefits – which it is not. There are many ways and combination of ways to fix this and they have been ignored by both parties.
As the 2024 presidential campaign ramps up, candidates are facing pressure to pledge not to touch Social Security. While this pledge is framed as ‘protecting benefits,’ it is – in reality – an implicit endorsement of a 23 percent across-the-board benefit cut in 2033, when the Social Security retirement fund becomes insolvent. In that year, annual benefits would be cut by$17,400 for a typical newly retired dual-income couple.
US Budget Watch 2024 is a project of the nonpartisan Committee for a Responsible Federal Budget designed to educate the public on the fiscal impact of presidential candidates’ proposals and platforms. Through the election, we will issue policy explainers, fact checks, budget scores, and other analyses. We do not support or oppose any candidate for public office.
The winner of the 2024 presidential election will face a Social Security trust fund rapidly approaching insolvency. The program’s Trustees project that the Old-Age and Survivors Insurance (OASI) trust fund will deplete its reserves by 2033, when today’s 57-year-olds reach the normal retirement age and today’s youngest retirees turn 72.
Upon insolvency, the law mandates that the OASI trust fund can only spend in amounts equal to incoming trust fund revenue, which means that all 70 million retirees, dependents, and survivors – regardless of age, income, or need – will see their benefits cut by 23 percent.
For a typical dual-income couple retiring in 2033, we estimate this would represent an immediate $17,400 cut in current dollar annual benefits and an immediate $13,100 cut for a typical single-income couple.
So the “typical” dual income couple is receiving well above the average couple? Using benefits amounts of the higher income folks as an example is extremely misleading, though that is the norm in this day and age – anything for the click.
I think that US Budget Watch made a very strong point. Any pledge not to touch Social Security is – in reality – an implicit endorsement of a 23% across-the-board benefit cut.
Now the questions is will partisan politics even allow the funding to be fixed by increasing taxes or cutting benefits much less than 23%, raising retirement ages, or any combination there of or are they all willing to die on that hill?
In the meantime seniors demand higher COLAs and some politicians want to expand Social Security.
One thing is for sure is that if it is not fixed by the 2032 presidential election, whatever party is in power will be blamed and it will not be forgotten for decades after that.
Yup, the party in power will be blamed, probably for higher SS taxes even though the trustees have been wearing Congress for nearly 20 years to do something. Even good efforts like the SS2100 bill a few years ago go ignored.
Social Security “cuts” will be on top of previous continued exponential Federal spending increases. Everyone will be affected with inflationary “cuts” in the purchasing power of US currency.
If 23% of a typical newly retired dual-income couple is $17,400, then their total benefit before the cut is $75,652. That is a monthly benefit of $6304 for two for an average of $3152/m each.
The SSA site https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/ has an average monthly benefit of $1,837.29, $22,047.48 annual, for a retired worker. The $17,400 “cut” is more like what is “remaining” after a 23% reduction of the average benefit.
The cut won’t happen in 2034 or 2033 regardless of what transpires politically between now and then. The Social Security program is the best retirement program going and it can only be tinkered with around the edges. All else is just posturing.
I say since no one paid for the SS benefits that they will receive, if they get benefits for 8 years they have all there FICA taxes back. So, let the cuts happen, it might even convince people that they need to save more for retirement. If Congress does nothing, it does not add to government debt, a good thing in my opinion. But of course Congress will do nothing until the last minute, and by then the only option will be to reduce projected payments for new retirees, and raise the FICA tax. There is almost no way any politician would cut SS checks for current retirees, if they want to stay in office, their #1 goal. I do not think they should raise the full retirement age as this will reduce the payments to workers that have to retire early for health reasons, but do not qualify for SS disability.
QUINNSCOMMENTARY 
Look at the max monthly benefit in 2023. A dual income couple would receive about 76k yearly and 17.4 k is 23% of that number.
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So the “typical” dual income couple is receiving well above the average couple? Using benefits amounts of the higher income folks as an example is extremely misleading, though that is the norm in this day and age – anything for the click.
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If the average couple relies on half of the higher earner or only one earner that’s quite possible
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I think that US Budget Watch made a very strong point. Any pledge not to touch Social Security is – in reality – an implicit endorsement of a 23% across-the-board benefit cut.
Now the questions is will partisan politics even allow the funding to be fixed by increasing taxes or cutting benefits much less than 23%, raising retirement ages, or any combination there of or are they all willing to die on that hill?
In the meantime seniors demand higher COLAs and some politicians want to expand Social Security.
One thing is for sure is that if it is not fixed by the 2032 presidential election, whatever party is in power will be blamed and it will not be forgotten for decades after that.
LikeLike
Yup, the party in power will be blamed, probably for higher SS taxes even though the trustees have been wearing Congress for nearly 20 years to do something. Even good efforts like the SS2100 bill a few years ago go ignored.
LikeLike
Social Security “cuts” will be on top of previous continued exponential Federal spending increases. Everyone will be affected with inflationary “cuts” in the purchasing power of US currency.
LikeLike
If 23% of a typical newly retired dual-income couple is $17,400, then their total benefit before the cut is $75,652. That is a monthly benefit of $6304 for two for an average of $3152/m each.
The SSA site https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/ has an average monthly benefit of $1,837.29, $22,047.48 annual, for a retired worker. The $17,400 “cut” is more like what is “remaining” after a 23% reduction of the average benefit.
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Look at the max monthly benefit in 2023. A dual income couple would receive about 76k yearly and 17.4 k is 23% of that number.
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Let this happen, and you’ll see a lot of Congressmen hanging from the Capitol!
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The cut won’t happen in 2034 or 2033 regardless of what transpires politically between now and then. The Social Security program is the best retirement program going and it can only be tinkered with around the edges. All else is just posturing.
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You’re right, it won’t be cut, but it will require a bit more than tinkering.
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I say since no one paid for the SS benefits that they will receive, if they get benefits for 8 years they have all there FICA taxes back. So, let the cuts happen, it might even convince people that they need to save more for retirement. If Congress does nothing, it does not add to government debt, a good thing in my opinion. But of course Congress will do nothing until the last minute, and by then the only option will be to reduce projected payments for new retirees, and raise the FICA tax. There is almost no way any politician would cut SS checks for current retirees, if they want to stay in office, their #1 goal. I do not think they should raise the full retirement age as this will reduce the payments to workers that have to retire early for health reasons, but do not qualify for SS disability.
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