Will Social Security run out of money? What will happen to my benefits?
The Treasury Department has released the annual Social Security and Medicare Trustees Reports, showing potential benefit reduction pushed back one year.
The Social Security Administration (SSA) sends out benefits to some 70 million Americans every month, and according to the agency, this check is the main source of income for most people over the age of 65.
Since so many beneficiaries depend on Social Security for their day-to-day expenses, the future solvency of the program is a topic of concern and debate. While the SSA currently collects payroll taxes from workers to fund benefits for retirees, the program is facing long-term financial challenges primarily due to demographic shifts, such as the aging population and declining birth rates, as well as other economic factors.
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Will Social Security run out of money? What will happen to my benefits?
The Treasury Department has released figures from the annual report of Social Security and Medicare, and the office says that the country’s better-than-expected economic performance improved the financial status of the programs.
Officials say that Social Security is likely to deplete the Old-Age and Survivors Insurance (OASI) Trust Fund reserves and run out of money to pay beneficiaries in full in 2033, unchanged from last year’s report. However, the Disability Insurance (DI) Trust Fund is projected to be able to pay 100% of total scheduled benefits through at least 2098.
If the OASI Trust Fund and DI Trust Fund projections are combined, the resulting projected fund (designated OASDI) would be able to pay 100 % of total scheduled benefits until 2035, one year later than reported last year.
The Social Security Administration expects the program’s trust funds to be depleted if no changes are made to address the funding shortfall. This could result in a reduction in benefits for future retirees unless Congress takes action to shore up the program’s finances. If the House does not act, continuing taxes will only be able to pay for approximately 79% of scheduled Social Security benefits.
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Social Security is a vital safety net for millions of Americans, providing retirement, disability, and survivor benefits. Policymakers continue to debate potential solutions to ensure the long-term sustainability of the program and the financial security of current and future beneficiaries.
Medicare also running out of funds
Meanwhile, the economy also helped boost the financial health of Medicare, and the expected life span of its reserves has been given an extension of five years.
According to the latest estimates, the funds will run out by 2036, compared to last year’s 2031 projection. However, without a new law from Congress, Medicare will only be able to afford to pay 89% of scheduled benefits by that time.