Americans plan for their retirement their entire lives, and many work hard to earn as much as possible for bigger Social Security benefits. COLA increases and depleted funds are important to know about.
Unfortunately, many people paying into the Social Security system now may not get to see as big of a benefit as they might think.
This could lead people into making quick and wrong decisions on their future retirement plans.
While there could be a cut in benefits by the time young people today retire, the likelihood of it being entirely gone is a myth.
What does the U.S. Treasury say about Social Security funds running out?
The original projection for funds to be slashed was 2034.
Thanks to a strong economic recovery following the pandemic, the new projection is 2035, according to CNBC News.
Disability has been projected to be paid for another 75 years.
This means the Disability Insurance Trust Fund can make it to 2057.
While this one year outlook is good news, it still means once that year arrives, benefits are going to be cut.
In 13 years, beneficiaries will only see 77% of their full retirement benefits.
Can Congress solve the Social Security trust fund crisis?
Unless Congress acts to help stop this from happening, there won’t be any avoiding it.
Not only are Social Security retirement benefits suffering, so is Medicare funding.
According to CNN Politics, Congress could do a few things to help resolve these issues.
Revenues could be raised by one third or costs could be cut by one quarter.
These solutions could be combined as well.
Raising the age is not going to make a difference because the issue is there not being as many workers as there are Social Security beneficiaries.
COLA increase for 2023
In addition to reviewing the current and projected benefit numbers, trustees also looked at the current projection for the 2023 COLA.
Because it is only May, these numbers may change.
The final decision regarding COLA increases is announced every year in October.
Right now, recipients could see an increase of 8% for monthly payments during the year 2023.
That’s a jump from the 5.9% seniors saw in 2022.
The final decision is made using the Consumer Price Index for July, August, and September of every year.
What sort of impact a large COLA increase could have on depleted funds is unknown.
The Social Security program faces more issues than just depleted funding
The Social Security Inspector General recently came under fire after it was discovered recipients were fined hundreds of thousands of dollars.
It was discovered that under the Trump Administration, the Civil Monetary Penalty Program was steering away from best practices.
Recipients who were found to be receiving benefits they weren’t entitled to were fined unaffordable fees.
One woman owed $435,000 for receiving $47,000 in benefits after following the advice of her own lawyer.
Many of these fines the people will never have the ability to repay.
Others found themselves losing their only source of income from Social Security after being fined.
In all, for 2021 there was a total of $11.5 million dollars in fines.
In comparison to 2017, that total was $700,000.