A new report finds that Social Security recipients face a 21% cut when a crucial trust fund that’s on pace to be depleted in 2033 runs dry and that neither of the leading contenders in this year’s presidential election has articulated a plan to stabilize the program.
The nonpartisan Committee for a Responsible Federal Budget (CRFB) noted in its report that Social Security is currently paying more in benefits than it receives in payroll taxes, which is depleting the reserves in the Old-Age and Survivors Insurance (OASI) Trust Fund that allows the program to pay out full benefits to retirees.
By law, when the trust fund is depleted, Social Security can only pay out benefits equal to what it receives in payroll taxes. The program’s trustees project that trust fund reserves will be tapped out in the fourth quarter of 2033, at which time today’s 58-year-olds will reach the typical retirement age and today’s youngest retirees turn 71.
In effect, that means there will be a mandated 21% across-the-board Social Security benefit cut for retirees starting in late 2033. That would amount to a $16,500 nominal benefit reduction for a typical dual-income couple who retired at the time of the trust fund’s depletion, or a $12,400 reduction for a typical single-income couple, according to CRFB.