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By Chloe Mayer
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A ticking timebomb could see social security cut by around $325 per month for each recipient, according to experts warning that the funds will run out if nothing changes.
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Social Security's trust funds—which cover old age and some disability payments—are currently set to be depleted in 2035, meaning that in a little over a decade, full benefits won't be paid out. Meanwhile, Medicare's go-broke date is estimated to fall the following year, according to the latest report, which will hit the checks for those with severe disabilities or illnesses in 2036. The impact of the combined funding shortfall was laid bare on Thursday when the head actuaries for Social Security and Medicare testified before the House Budget Committee about exactly how recipients' payments are set to be hit if Congress doesn't address the issue before then.
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The problem, sparked by increasing numbers of Baby Boomers retiring, has been exacerbated by an aging U.S. population; it's feared that younger Americans' taxes will fail to keep up with the financial needs of the older generations. Financial experts have been warning that steps must be taken as soon as possible to protect citizens' coverage.
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Centers for Medicare and Medicaid Services Chief Actuary Paul Spitalnic and Social Security Administration Chief Actuary Stephen Goss testified about the solvency of their agencies last week.
Medicare's Health Insurance (HI) trust fund, which covers hospital and care following patients' hospital stays, is projected to be depleted in 2036 when only 89 percent of benefits would be payable.
And Social Security recipients will fare even worse. The agency's combined money pots—the Old-Age and Survivors Insurance (OASI) trust fund and the Disability Insurance (DI) fund—are forecast to be depleted by 2035. At that point, just 83 percent of benefits would be payable, resulting in an automatic cut of 17 percent for recipients.
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The average monthly benefit currently stands at $1,907 as of January 2024, according to Fox Business. Using that figure, a 17 percent cut would leave beneficiaries with a check for $1,582.81. That equates to $324.19 less per month and around $3,900 less per year.
Various ideas were discussed to keep Social Security and Medicare solvent during the hearing, such as raising taxes for those making more than $400,000 or approaching the problem from another angle by raising the retirement age from 67 to 70 and cutting benefits.
Goss said Congress will have to keep Social Security solvent by either reducing benefits by 25 percent or increasing revenue by 33 percent—or enacting a combination of these actions.
Newsweek has reached out by email seeking comment from the Centres for Medicare & Medicaid Services, the Social Security Administration, and the White House.
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