The just-released Social Security Trustees Report found that, without a fix from Congress, the Social Security retirement fund will become depleted in 2033, with a 23% benefit cut at that time.
"The question is what Congress will do," Nancy Altman, president of the advocacy group Social Security Works, said in a statement.
The trustees report "shows that Social Security is fully affordable, costing only about 6 percent of GDP at the end of the 21st century," Altman said. "It has a modest funding shortfall, which is still years away."
At the time of trust fund depletion, "Social Security benefit outlays would automatically fall so as not to exceed program revenue," the Bipartisan Policy Center said in a blog post.
"Given projections of scheduled benefits, this 23% cut would amount to $625 less per month for the average beneficiary in 2033, or more than $7,500 per year," BPC said. "Social Security benefits are the largest source of income for many older Americans: For more than 20% of those aged 65 or older, Social Security makes up at least 75% of household income, and for nearly 14% of Americans aged 65 or older, Social Security makes up at least 90% of household income."
Congress, BPC continues, "could choose to allow Social Security to tap so-called 'general revenue,' borrowing hundreds of billions of additional dollars annually to cover the shortfall and pay scheduled benefits."
Social Security’s financing shortfall "is projected to be approximately $25 trillion, or 1.3% of total GDP, over the next 75 years," BPC states. "If Congress chooses to break the firewall between Social Security and the rest of the budget and issue additional debt to pay full Social Security benefits, the extra borrowing would total $533 billion (more than 1.2% of GDP) in 2034 alone, increasing each year to reach $1 trillion annually by mid-century."
Bottom line: "The longer Congress waits to address Social Security’s financial challenges, the fewer options it leaves to solve the problem without resorting to abrupt benefit cuts, massive additional borrowing, or both," BPC said.
As the National Committee to Preserve Social Security and Medicare points out, there is no bipartisan consensus on a path forward. In the short term, the group said Friday in a statement, the only Social Security bills that might be considered "are noncontroversial — like S. 1666, the Improving Social Security’s Service to Victims of Identity Theft Act," introduced on May 7 by Sens. Chuck Grassley, R-Iowa, and Maggie Hassan, D-N.H.
See the gallery for bills that have been introduced so far this year to, among other measures, limit clawbacks of Social Security overpayments to 10% of a beneficiary's monthly benefit, expand Social Security benefits by $2,400 a year and increase the income thresholds at which Social Security payments become taxable.
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