The Clock is ticking

Social Security
Insolvency Clock

This year the average monthly Social Security payment is $1,461–$17,532 per year.

Without Congressional intercession, by 2034, Social Security will be cut across-the-board by about one quarter to ensure all beneficiaries receive their payments.

To put this into perspective, the average monthly benefit would be reduced from $1,461 to $1,095.75–$13,149 per year. In 2019, the Federal Poverty Level is $12,140. For retired Americans, this is not an option. Those that depend on Social Security can’t survive this cut.

Congress has the power to prevent this right now.

Until then, we have…

What is Social Security Insolvency?

The 2018 Social Security Trustees report estimates the Social Security Trust Funds will no longer be able to pay full scheduled benefits to retirees, requiring as much as a 25% benefit reduction to most beneficiaries.

The United States is a rapidly aging society. In twelve years, the population of Americans age 65 and older has increased 33%. With the retirement of the Baby Boomers and overall life expectancy increase, the demand on the Social Security Trust Fund grows—while the payroll contributions funding it do not.

This is what we mean when we say Social Security is insolvent: benefit payments exceed payroll contributions, and without legislative intervention, the necessary result is brutal benefit cuts.

Luckily, we have already researched several policy options to both stop insolvency and strengthen Social Security overall. We are prepared to correct this problem and protect the benefits of America’s retirees, and ensure the retirement security of future generations right now…

…If only Congress would take action.

Source: CRS, based on memorandum from Daniel Nickerson, actuary, and Kyle Burkhalter, actuary, to Chris Chaplain, supervisory actuary, and Karen Glenn, deputy chief actuary, “Present-Law OASDI Payable Percentages: Present-Law Revenue as a Percent of the Cost of Providing Scheduled Benefits Through Year 2091,” July 21, 2017. Notes: Projections are based on the trustees’ 2017 intermediate assumptions. In calculating the share of payable benefits, OCACT limits income from the taxation of benefits to the amount that would be obtained from the payable benefits.

What Can We Do?

The 2018 Trustees Report is one of many. Year after year those who know Social Security’s financing and demographic challenges best have warned Congress about this funding shortfall.

Nothing about this is anything new.

Through the years, legislators, economists, and researchers have studied a diverse set of potential policies that would increase Social Security funding, extend Social Security’s solvency, and in some cases, allow for increased benefits.

We have options. And the sooner we enact them, the less challenging the transition will be.

We can’t wait until benefit cuts are the only way. We can’t wait until immediate large payroll tax increases burden working Americans.

The time to act on Social Security insolvency is right now.

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