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Social Security Benefits: Retirees To Face Loss In Coming Years

Social Security Benefits
Social Security Benefits; Source- The Motley Fool

The Social Security system is unstable, healthcare expenses are out of control, and inflation is still a problem for retirees today. And by the following decade, many people may experience significant reductions in Social Security income, according to a study by the Committee for a Responsible Federal Budget (CFRB).

Social Security Benefits

Social Security Benefits; Source- CNET

Social Security Benefits Reduction In Future

The typical dual-income pair retiring in 2033 would experience an annual benefits reduction of $17,400 in today’s money. This is because the Social Security fund is predicted to become bankrupt in 2033. Benefit reductions, however, would differ according to income. A wealthy people couple would see their benefits reduced by $23,000, while a low-income pair would see their benefits reduced by $10,600 year. If the Social Security fund, technically known as the Old-Age and Survivors Insurance (OASI) Trust Fund, becomes insolvent in 2033, 70 million pensioners would collectively see a 23% payment reduction. The average retirement age would be reached by today’s 57-year-olds at that point, and the youngest retirees would be 72.

Sole Source Of Income As Social Security Benefits

The same is true for some people, even while Social Security payouts are only one part of a pension funds strategy that may include involve pensions, 401(k) plans, and individual retirement accounts (IRAs). According to information collected from the National Institute on Retirement Security (NIRS), 40.2% of Americans in retirement rely only on Social Security benefits for their income. Payroll taxes that are taken out of employees’ paychecks automatically pay towards Social Security benefits. Their employers also contribute to the fund. For 2023, the Social Security tax rate is 6.2% for both employers and employees, and it is applicable to income up to $160,200 for employees.

A New Campaign BG Social Security Administration

According to a study by the SSA, the OASI fund might involve able to cover all scheduled payments until 2033. After then, the fund’s reserves would be exhausted and it could only be able to pay out 77% of the benefits that were scheduled. The fund would continue to operate, but it would only be viable enough to pay recipients in part. Some Americans may qualify for Supplemental Security Income (SSI), a separate SSA program from Social Security benefits, depending on variables like income. The SSA recently unveiled a new campaign to increase awareness in communities with limited resources that experienced the sharpest drops in SSI programs since the COVID-19 pandemic and where a large proportion of residents were individuals of color and/or lived within or below the 150 percent Federal poverty threshold.

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