Social Security Benefits Will Be Cut Unless Congress and the President Take Action
The law mandates cutting benefits when the Social Security Trust Fund is exhausted, currently projected for 2034
Millennial and Generation X consumers may not receive as much in their Social Security payments upon retiring as they believe.
According to Consumer Affairs, AARP New York has analyzed the Annual Report of the Social Security Trustees and come to a worrying conclusion: "Millions of workers—10.4 million in New York alone—will see their benefits cut by 25% unless Congress and the President take action to prevent it."
The cuts will not occur until 2034, when the Social Security Trust Fund is projected to be exhausted, so current retirees need not worry. However, because the cuts are mandated by law to occur when the Fund is out of money, the only way to prevent the cuts is for Congress to keep the Fund going.
This can be done in one of two ways: either by starting to slowly reduce benefits now, or by increasing the amount collected in Social Security and Medicare taxes.
Neither option is attractive, but the situation is even more dire than it appears.
"The Social Security Trust Fund shows a surplus on its books, but there is no money – it's made up of IOUs Congress has written since 1983, when it raised the Social Security withholding tax to build up a surplus – but spent the money on other things," explains Consumer Affairs. "Now, Social Security payments are being made out of the government's general operating budget with no 'surplus' to offset them."
Beth Finkel, state director of AARP New York, believes that this is the best possible time to address the problem because of the election cycle.
"Doing nothing is not an option," Finkel told Consumer Affairs. "The question is how long will our leaders wait to act. The presidential candidates need to show they can lead on this issue and give voters real answers on how they will update Social Security for future generations."