New report finds Social Security is set to run dry by 2035

WASHINGTON (TND) — Nearly 68 million Americans monthly are expected to receive a Social Security benefit, amounting to about $1.5 trillion in benefits paid during the year. The latest annual report from the Social Security Board of Trustees indicates that Social Security continues to grapple with "significant financing issues," and is on course to be insolvent by 2035.

Since 2010, Social Security has been operating at a deficit, spending more money than it brings in. This trend has exacerbated the strain on the program's financial reserves.

If Social Security were to run out of funds by 2035, beneficiaries could face cuts to their benefits. The prediction for insolvency is a year later than the report’s forecast last year. According to the agency’s estimates, individuals could experience a 17% reduction in their current benefits. While this scenario would undoubtedly have a profound impact on millions of Americans, it represents a slight improvement from previous projections, which suggested a 23% cut in benefits.

The roots of Social Security's financial instability trace back to 2010 when the program began operating at a deficit for the first time since 1983, spending more than it earns. This trend has been exacerbated by the aging population and the retirements of the baby boomer generation. A fact sheet from the Social Security Administration reports in 1940, the life expectancy of a 65-year-old was almost 14 years, but today it is over 20 years. The fact sheet also reports the number of Americans aged 65 and older is expected to surge from about 58 million in 2022 to about 75 million by 2035.

To avert this looming crisis, action from Congress is essential. Tough reforms, such as potential increases in taxes or cuts to benefits, are being considered to shore up Social Security's finances and ensure its long-term sustainability. Republicans have also proposed raising the retirement age to 67.

These measures are reminiscent of the last major Social Security reforms that were enacted under President Ronald Reagan in 1983 when Social Security insolvency was just months away. Under those amendments, Congress raised the retirement age, delayed cost-of-living adjustments to benefits, extended coverage to new federal employees and nonprofit employees, and increased taxes to stave off insolvency.

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