Social Security on the Brink of Collapse – Possible 20% Payment Cuts by 2032 Unless Congress Takes Urgent Action

Social Security is facing a looming crisis as experts warn of possible cuts of up to 20% in payments as early as 2032 unless Congress intervenes to preserve its funding.

Social Security may face 20% payment cuts by 2032 without Congressional funding intervention.

Social Security Payments and the Challenges It Faces

Upwards of 66 million people currently receive Social Security benefits, with the average payment being $1,691. However, cuts of 20% would reduce payments to $1,352, which is going backward from the progress made to increase benefits through cost of living adjustments (COLAs). According to GOBankingRates, more than half of retirees say that the higher adjustment made earlier this year isn’t enough to get by on.

One of the reasons why Social Security is facing funding challenges is the ballooning number of beneficiaries. People are living longer, meaning they need benefits for a longer period of time. At the same time, they are working fewer years, which affects the money flow coming in.

The current funding crisis may lead to significant reduction in benefits in the future. The Committee for a Responsible Budget (CFRB), citing Congressional Budget Office (CBO) data, warns that Social Security could become insolvent as early as 2033 to 2035. Upon insolvency, benefits would be automatically cut by 23 percent across the board, according to the CFRB, as reported by GOBankingRates.

Social Security Payments and the Challenges It Faces

Lawmakers are considering remedies such as raising the retirement age to 70 and increasing taxes. President Biden and Senator Joe Manchin have proposed raising taxes on the wealthiest Americans and increasing the cap on the amount they pay into the Social Security system to ensure its longevity.

The last major overhaul of Social Security occurred in 1983 when Congress raised the retirement age and increased payroll taxes. President Biden is expected to address Social Security and Medicare funding in his upcoming budget proposal.