Eighty to ninety percent of retirees rely on their monthly payout from Social Security to cover their bills.
According to Gallup’s yearly polls spanning 20 years, between 76% and 88% of those not yet retired anticipate using their payment to cover some of their retirement expenses. Nevertheless, politicians on Capitol Hill are seeking to remedy the program’s inadequacies as studies reveal that Social Security’s financial health is deteriorating.
The Social Security Board of Trustees has produced annual reports tracking income collection, distribution, and demographic trends since the first retired-worker payout was sent out in 1940. The projected long-term budget shortfall for Social Security was $22.4 trillion, according to the 2023 Trustees Report. The Old Age and Survivors Insurance Trust Fund (OASI) will run out of money by 2033, which is terrible news since it pays out monthly payments to more than 50 million retirees and almost 5.8 million survivors. Massive benefit cutbacks of up to 23 percent may be required to keep the OASI from slashing benefits again until 2097 if its asset reserves run dry.
Persistent demographic developments, such as baby boomers’ retirement and greater lifespan since retired-worker benefits started in 1940, are primarily to blame for Social Security’s inadequacies. Other demographic shifts that hurt Social Security are not as noticeable, such as the historically low birth rate in the United States, the half-halving of net-legal migration since 1998, and the increasing income disparity.
Members of Congress, including President Biden and his cabinet, are aware that Social Security’s financial footing has taken a hit. Joe Biden’s four-point strategy for 2020 was to increase tax revenue by targeting the wealthy.
According to Yellen, Restoring Social Security’s 75-year solvency will only require small measures, such as changes to expenditures and income.