The main sources of revenue for Social Security, taxes on income and benefits, are falling short. Experts warn that if no action is taken, the program could face a 20% cut or more to benefits by 2033.Historically, workers paid more into Social Security taxes than what was paid out in benefits until 2010. Since 2021, the total cost has exceeded the program's income from taxes and interest, and Congress has been borrowing to make up the difference. Congress previously spent surplus social security funds elsewhere."If we want to help shore up its financing, looking at those sources of revenue and boosting them should be part of the solution," Shai Akabas of the Bipartisan Policy Center said.It's why researchers like Akabas are proposing a new funding strategy, warning the time to save Social Security is now. Beyond reducing benefits and upping taxes, other proposals include raising the retirement age, tying initial benefits to inflation instead of wages, and reducing the amount paid to wealthier beneficiaries.But change may be slow to come as Republicans and Democrats alike have promised to make little to no changes to the program. Several have instead promised policies that would only accelerate the path to insolvency."People are reluctant to acknowledge the need for policy reforms," Romina Boccia of the Cato Institute said.A delay over addressing the problem raises even more questions over whether solutions will come in time."If there's not much hope of those solutions getting put into law, the upside doesn't look very appealing," Akabas said.Researchers warn that Social Security should not be a primary source of retirement income and that individuals should be planning to save on their own.
The main sources of revenue for Social Security, taxes on income and benefits, are falling short. Experts warn that if no action is taken, the program could face a 20% cut or more to benefits by 2033.
Historically, workers paid more into Social Security taxes than what was paid out in benefits until 2010. Since 2021, the total cost has exceeded the program's income from taxes and interest, and Congress has been borrowing to make up the difference. Congress previously spent surplus social security funds elsewhere.
"If we want to help shore up its financing, looking at those sources of revenue and boosting them should be part of the solution," Shai Akabas of the Bipartisan Policy Center said.
It's why researchers like Akabas are proposing a new funding strategy, warning the time to save Social Security is now. Beyond reducing benefits and upping taxes, other proposals include raising the retirement age, tying initial benefits to inflation instead of wages, and reducing the amount paid to wealthier beneficiaries.
But change may be slow to come as Republicans and Democrats alike have promised to make little to no changes to the program. Several have instead promised policies that would only accelerate the path to insolvency.
"People are reluctant to acknowledge the need for policy reforms," Romina Boccia of the Cato Institute said.
A delay over addressing the problem raises even more questions over whether solutions will come in time.
"If there's not much hope of those solutions getting put into law, the upside doesn't look very appealing," Akabas said.
Researchers warn that Social Security should not be a primary source of retirement income and that individuals should be planning to save on their own.