What the new social security fund exhaustion dates mean for your benefits

What the new social security fund exhaustion dates mean for your benefits

jimmietv | iStock | Getty Images

A new report released Tuesday by the Social Security Administration reveals new estimates of the impact of the COVID-19 pandemic on the program’s already struggling trust funds.

The results show that the fund the program receives was “significantly affected” by both the pandemic and the recession of 2020.

From now on, the fund that pays retirement and survivor benefits – known as the Old Age and Survivors Insurance Trust Fund – will only be able to pay full benefits until 2033. That’s one year ahead of schedule. last year’s estimates.

At this point, the program would only be able to pay 76% of these planned benefits.

Meanwhile, the Disability Insurance Trust Fund will be able to pay benefits by 2057 – eight years earlier than projections last year. At this point, Social Security will be able to pay 91% of these benefits.

Together, the two trust funds are expected to be able to pay out the full stipulated benefits by 2034, a year earlier than estimates from the previous year, when 78% of benefits will be payable.

Notably, last year’s estimates did not take into account the effects of COVID-19.

Although the vacancy dates have already been extended, benefits will be paid even after reaching these dates.

Furthermore, although the adjustment for the cost of living for next year has been estimated at 3.1%, this increase is likely to be closer to 6% due to the recent rise in the index. consumer prices, senior administration officials said. This is in line with recent estimates.

This will be the biggest increase in decades due to recent price increases in sectors such as autos and energy. COLAs rose 1.3% this year.

Although this report is the first to show the effects of the COVID-19 pandemic on social security, the full impact of the prospect of persistent inflation will not be known until next year’s report, Shai said. Akbas, Director of Economic Policy at Biparty Politics. Center.

He added that a sustained inflation rate of more than 2% could have a significant impact on the finances of the program.

Find more retirement news here.

Aqabas said the Aug.31 release date for the Social Security Administrators’ Annual Report was also the most recent in at least 25 years. Usually the report arrives in April, although it is released later than before.

“This relates to the approach of ensuring that we keep a close eye on the finances of the program,” Aqabas said.

While the report’s findings indicate a need to fix the program – either through higher taxes, lower benefits, or a combination of both – lawmakers are unlikely to act immediately, Akbas said. noted.

Indeed, the program’s projections are not as dire as expected immediately after the start of Covid-19 last year. Prior to the economic recovery, the Bipartisan Policy Center estimated that trust funds used to pay retirement benefits could be depleted by 2029 to 2033.

.

LEAVE A REPLY

Please enter your comment!
Please enter your name here