Social Security shortfall & looming benefit reductions

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nycfan

nycfan

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Social Security’s Finances Erode Further and Could Spell Benefit Cuts​

The nation’s key program for retiree benefits continues to see financing shortfalls. Unless Congress acts, those drops could lead to payment cuts in eight years.

🎁 —> https://www.nytimes.com/2025/06/18/...e_code=1.P08.NrLy.chRcRTtrV0TZ&smid=url-share

“… The deteriorating financial outlook for the retirement program, which supports roughly 61 million Americans, was released in its annual trustees report on Wednesday. It is now expected to run out of money nine months earlier than previously projected, which means benefits could be reduced by 23 percent if Congress does not act to bolster the program.

That puts the Social Security Old-Age and Survivors Insurance Trust Fund, which pays retiree and survivor benefits, on schedule to be depleted in 2033, or when today’s 59-year-olds turn 67. At that time, the program will have enough revenue coming in to pay only 77 percent of total scheduled benefits.

The most recent setback was driven largely by a policy change, known as the Social Security Fairness Act, which took effect in January and increased benefits for about 2.8 million government and public sector workers. But there were other factors: Government actuaries now assume that the birthrate will remain lower for longer, while projecting that workers’ compensation would weaken over time as they capture a lower share of the nation’s economic output. …”
 
We’ve gotten serious enough about it to fix this before but not sure if we can gather support to do it again.
 
Cont’d

“… In their report, the trustees urged lawmakers to address the shortfalls in a timely way so that any changes could be phased in gradually, giving workers and beneficiaries time to adjust.

“Implementing changes sooner rather than later would allow more generations to share in the needed revenue increases or reductions in scheduled benefits,” the trustees said in the report.

… Social Security and Medicare have long faced a financing shortfall, partly because of demographic changes. Dwindling birthrates mean fewer workers are paying taxes into the programs, all while thousands of baby boomers are retiring daily and collecting their benefits for longer periods.

In addition, a larger share of the country’s wage base is not subject to payroll taxes, Social Security’s lifeblood, compared with years past. The taxes are applied only up to $176,100 in income, and rising income inequality means a greater share of Americans’ earnings exceeds that cap and is not taxed.

… To put the magnitude of the financing shortfall in perspective, the trustees noted that revenue would need to rise by an amount that would raise the payroll tax by 3.65 percentage points. That would keep the combined retirement and disability trust funds solvent for the next 75 years, and bring the total tax to 16.05 percent.

In many cases, workers split the payroll tax burden with their employers; each currently pays 6.2 percent on earnings up to $176,100, for a total of 12.4 percent. By law, Social Security (unlike parts of Medicare) cannot use money from the federal budget’s general revenues to pay benefits….”

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Some of us pay both the employer and employee portion of payroll taxes, so an increase in the cap (a necessity) and the rate is potentially a pretty substantial tax increase. I’m ok with that if it is universal and that’s what it takes. Would love to see capital gains over some reasonably high threshold taxed (at least prior to retirement) as well (with a deduction for payroll tax amount paid on regular income to avoid double dipping), though doubt that will ever fly.
 
Cont’d

“… Government actuaries have estimated that fixing Medicare’s trust fund over the long term would also require significant changes. To make sure Medicare had enough money to pay all its bills over the long term, Medicare would need to either reduce its overall spending on hospital care by 9 percent or lawmakers would have to raise the payroll tax that funds it to 3.32 percent from 2.9 percent, according to the report.…”
 
Kingpin said:
Easy fix. Raise the income cap on SS tax payments. It’s currently something like $175K (?). Should have happened years ago.
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If given the choice between receiving social security and also helping starving children or working until they die so Trump and Musk can have just a little bit more, every single Trump voter would choose the latter.
 
Kingpin said:
Easy fix. Raise the income cap on SS tax payments. It’s currently something like $175K (?). Should have happened years ago.
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There are fixes for Social Security, but the problem is that too many conservatives don't want it to be fixed, so they won't. They've become masters at screwing things up so the whole government doesn't work as well as it should. They then say "oh, look, this program or government agency doesn't work!" and use that to justify cutting it even more. Look at what the NC GOP legislature has very successfully done to NC public ed over the past fifteen years. They're steadily starving it to death by a variety of underhanded ways, and then when it doesn't work as well as it should and buildings are falling apart and there's a teacher shortage because of shitty pay (one of the worst in the country) they just say "oh, look, our public schools are failing! Let's spend even more on vouchers and charters and not give veteran teachers a raise again!" And most voters just play right along.
 
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If the gutting of Social Security happens, it will be because the people who would benefit from it the most voted to kill it by electing MAGA/Republican candidates. And privatizing Social Security will absolutely be the beginning of the end of it. The "we need to make it more efficient" line grows tiresome, and we all know it's bullshit. So naturally, Ted Cruz is involved.

 
nycfan said:


Social Security’s Finances Erode Further and Could Spell Benefit Cuts​

The nation’s key program for retiree benefits continues to see financing shortfalls. Unless Congress acts, those drops could lead to payment cuts in eight years.

🎁 —> Social Security’s Finances Erode Further, Risking Benefit Cuts

The most recent setback was driven largely by a policy change, known as the Social Security Fairness Act, which took effect in January and increased benefits for about 2.8 million government and public sector workers.
Click to expand...

I have a dear friend who worked for the postal service and has a penison but was not eligible for Soc sec
Now she gets I think one half of Soc sec . She is pleased!
 
heel79 said:
How many years have we heard this was going to happen?
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Sure, but you're ignoring the drastically different political climate which exists now where Trump/MAGA Republicans just say, "fuck you" and do it anyway. I'm not saying they'll absolutely succeed, but their chances of executing on their long-standing agenda items are greater than ever.

I'd say the only difference with this one would be they can't just cut it outright - they have to "frog in a pot of water" it over time so it seems like "oh, we tried to make it better and it went bad because of the Democrats - if you're holding the bag, blame them and not us."
 
Nake people making over $500,000 per year pat tge 6# payroll tax. No reason for Mark Z, Elom M or LeBron James not to pay

SS wouyld get a windfall from the 30s and 40s tech bros etc
 
korgguy1971 said:
Sure, but you're ignoring the drastically different political climate which exists now where Trump/MAGA Republicans just say, "fuck you" and do it anyway. I'm not saying they'll absolutely succeed, but their chances of executing on their long-standing agenda items are greater than ever.

I'd say the only difference with this one would be they can't just cut it outright - they have to "frog in a pot of water" it over time so it seems like "oh, we tried to make it better and it went bad because of the Democrats - if you're holding the bag, blame them and not us."
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Fucking with Social Security in any way that reduces existing benefits will be the end of the Republican Party.
 
heelinhell said:
No, I am 74yo and took the early SS benefit at 62yo. I retired at 55yo and would have taken it then.

I chose 59yo because that age is near the 59 1/2 yo age at which time you can withdraw from your other retirement accounts.
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I did not know that-thanks for the 59 1/2 information
I took it early also-I was recently unexpectedly divorced and my finances were "changed"
As it turns out I have saved every dime of it-somehow my expenses have plummeted now that I am on my own lol
 
mpaer said:
I did not know that-thanks for the 59 1/2 information
I took it early also-I was recently unexpectedly divorced and my finances were "changed"
As it turns out I have saved every dime of it-somehow my expenses have plummeted now that I am on my own lol
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I calculated that my breakeven age would be 82. I didn't need the benefit and guessed I could reinvest the benefits and at least match the 8% increase SS provides each year that you wait. So far so good.
 
There's a lot of levers in the Social Security system; the separate rates paid by employee and employer, the maximum wage base for each, the definitions of stuff like Full Retirement Age, Survivor and Spouse benefits, etc. They'll tweak some or all of them and spread the hurt. I was told by a long time lobbyist that behind closed doors they discussed means testing for benefits but I think that would be the third rail. It would mean telling voters that the annual SS benefits statements they'd gotten all these years were fictitious. I've read proposals to cap benefits at $50k for singles and $100k for couples. That's higher than the benefits I see on tax returns but inflation and COLA's could get us there, I suppose.
 
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