In just seven years, Social Security will reach a fiscal cliff that could leave millions of American retirees with drastically reduced benefits, according to a recent analysis by the Committee for a Responsible Federal Budget (CRFB). The think tank’s new report projects that, unless Congress acts, Social Security’s main trust fund will be insolvent by the end of 2032, triggering automatic and painful benefit cuts for everyone relying on the program.
How painful? Around $18,000 less per year for retirees who depend on the program. This is not the first time the CRFB has warned about this, and it’s a common refrain from no less than the Oracle of Omaha himself: famed investor Warren Buffett.
The ticking clock
Social Security and Medicare, the two bedrock programs supporting older Americans, are drawing closer to insolvency than many might realize. The most recent data, compiled from the programs’ own trustees and enhanced by CRFB calculations, forecasts that by late 2032, Social Security’s retirement program will no longer be able to pay out promised benefits in full. At that point, the law dictates that payments must be limited to the amount coming in from payroll taxes—resulting in an immediate, across-the-board benefit reduction.
