Time Is Running Out on Social Security Benefits

SOCIAL SECURITY PAYMENTS WILL BE CUT automatically in just eight years unless Congress acts to revamp the program's financing.

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That's according to the annual report from the trustees that says Social Security's trust will run dry in 2033—or in 2034 if Congress changes the law to combine the separate funds for old-age benefits and for disability insurance. Medicare's hospital insurance fund will run out in 2033.

“Congress must act to protect and strengthen the Social Security that Americans have earned and paid into throughout their working lives,” says AARP CEO Myechia Minter-Jordan. “More than 69 million Americans rely on Social Security today and as America’s population ages, the stability of this vital program only becomes more important.”

Last year, the trustees projected that the Social Security trust fund would become insolvent by 2035 and Medicare’s in 2036.

If the trust funds are depleted, payroll-tax-funded benefit payments will continue, but Social Security will be reduced to about 80% of full benefits and Medicare payments will be reduced by 11%. A 20% cut would chop $400 from the $2,002 average monthly benefit of today.

The report gave three primary reasons for the earlier depletion of the trust fund:

• The enactment of the Social Security Fairness Act made 3 million government employees newly eligible to collect Social Security Benefits.

• Fertility rates are not projected to grow at the same rate as was projected in last year's report.

• Slower earnings growth for workers than previously forecast.

• Immigration crackdowns also appear to be having an effect. According to a recent analysis from the Wharton School at the University of Pennsylvania, “deporting unauthorized workers over 10 years cuts Social Security revenue, raises deficits by $133 billion and $884 billion. The Trust Fund depletes six months earlier.”

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