Social Security Retirement Benefits Could Be Cut in 2033

Social Security Trustees estimated the following in their 2024 report:

• The Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100% of total scheduled benefits until 2033. At that time, the fund’s reserves will become depleted and continuing program income will be only sufficient to pay 79% of scheduled benefits. (59.5 million receive these retirement benefits.)

• The Disability Insurance (DI) Trust Fund is projected to be able to pay 100% of total scheduled benefits through at least 2098. (8.3 million receive these disability benefits.) 

 OASDI total cost began to be higher than total income in 2021 and is projected to continue to do so through about 2040. In this period, the retirement of the baby-boom generation (born from 1946-1964) is increasing the number of beneficiaries much faster than the increase in the number of covered workers, as subsequent lower-birth-rate generations replace the baby-boom generation at working ages. 

For the OASI and DI Trust Funds to be fully solvent throughout the 75-year projection period: (1) revenue would have to have an immediate and permanent payroll tax rate of 15.73%; (2) scheduled benefits would have an immediate and permanent reduction of 20.8% applied to all current and future beneficiaries, or 24.8% if the reductions were applied only to those who become initially eligible for benefits in 2024 or later; or (3) some combination of these approaches would have to be adopted.

Currently, employees and employers each pay 6.2% of wages up to the taxable maximum of $168,600 (in 2024), while the self-employed pay 12.4%. This means someone with an annual income of $1 million stopped contributing to the program on March 2, 2024, according to the Center for Economic and Policy Research. 

• The Social Security Administration’s Office of the Chief Actuary has calculated that if the cap on taxes was eliminated, the funds raised could erase about two-thirds of the financial crisis facing Social Security. Since your working age children, grandchildren and great grandchildren would be subject to the payroll tax on every dollar of wages, do you support removing the cap? 

The NRLN looks forward to reading your response to the above question and any other comments you may have on funding of Social Security.