Age-old story: The dwindling of SocSec benefits

Age-old story: The dwindling of SocSec benefits

Age-old story: The dwindling of SocSec benefits

It appears that Social Security won't be able to pay full benefits by 2034. The warning from the Social Security trustees is a year earlier than expected and it's blamed in part on the COVID-19 pandemic.

"Social Security has been on a track towards insolvency for many decades now," says Rachel Greszler of The Heritage Foundation, a center-right think tank headquartered in Washington, DC. "Some of the reasons for that shift up in insolvency dates is definitely COVID-19, but it has more to do with the economic projections going forward because actually, payroll tax revenues to the system rose by 6% last year."

So, she explains, it wasn't just that there was no money coming and they don't have as bright an outlook going forward.

Greszler, Rachel (Heritage Foundation) Greszler

"The reality is that the 2034 date talks about the combined Social Security's old age retirement program as well as its disability insurance program," the economics researcher tells AFN. "And actually, it's [the] old age retirement program that most people think about for Social Security that is on track to become insolvent in 2033."

In other words, says Greszler, people who are 50 years or younger today "can't count on receiving even a single year's worth of the benefits that the program says it will pay to you."

AFN asked what this means for those who are currently on Social Security.

"Absent any changes in the program – [meaning] Congress doesn't do anything and we get to 2033 – that means that everybody who is currently receiving a Social Security retirement check will get a 24% reduction in benefits … and that could actually increase a little more over time," adds Greszler.

According to Greszler, The Heritage Foundation has suggestions on how to fix the problem.

"We have a series of proposals that would actually increase benefits for the lower-income earners, but it would gradually reduce them for middle-and-upper income earners so that eventually you get to a universal benefit and everybody gets the same level," says Greszler.

"Then, there are some common-sense changes – like indexing the eligibility's age to life expectancy since people are now living 17 years longer than they were when the program first started, and using a more accurate inflation index."