Most people are worried about the future of Social Security. That’s because Social Security is paying out more than is being collected and going into its trust fund to make up the difference. If this were to continue, the trust fund would be exhausted at some point, and the only money for benefits would be limited to revenue being collected at the present time. However, recent reports have improved the outlook, says this article “Social Security Retirees Just Got Some Good news About Future Benefit Cuts” from yahoo! finance.
While future cuts are still a possibility, there’s also good news, according to the 2024 Social Security Trustees Report. The Old-Age and Survivors Insurance (OASI) Fund will be able to continue to pay full benefits until 2033. The Disability Insurance (DI) Trust Fund is anticipated to be able to pay benefits until at least 2098.
What would happen if the OASI Fund were emptied? A few things could happen. A law change could combine the OASI and DI funds. Because this is a real possibility, the trustees share data on when the combined funds might be emptied.
In 2023, the Trustees Report said the combined funds would pay full benefits until 2034, but this year’s report shows there’s enough money to pay full benefits until 2035. It also notes that if any cuts were to go into effect, the money coming into Social Security from the combined funds would be able to pay 83% of promised benefits, up from 80% in 2023.
These may sound like small improvements but they do indicate a trend in the right direction. Much of this is due to stronger-than-expected economic growth, which has led to improved labor productivity and lower projections for long-term disability insurance benefits. Taken together, Social Security’s long-term stability is looking good.
The additional year means any benefit cuts will be smaller than previously anticipated. If needed, Congress could also act to fund the trust funds. That said, there’s still reason to worry about what might happen in 2035, since many seniors count on Social Security to fund most of their retirement.
Lawmakers are likely to prevent this program from being defunded, since seniors continue to be a major voting bloc. Similar situations occurred in the early 1980s, and Congress passed amendments to protect the program. Those amendments from forty years ago included a change to Full Retirement Age (when a person may collect an unreduced benefit) and imposed a tax on some benefits for high-wage earners. We could see similar changes in the future.
Overall, though, the news is good. Hopefully, the good economic news will keep coming to protect Social Security, giving lawmakers more time to figure out ways to fund this vital program.
Reference: yahoo! finance (May 16, 2024) “Social Security Retirees Just Got Some Good news About Future Benefit Cuts”
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