The effect of skipping past Social Security’s looming solvency deadline without a solution is by now widely known. If payroll taxes are the only available funds, Social Security will pay 77% of scheduled benefits.
While still a sizable portion of promised benefits, the cuts will nonetheless hurt. The Committee for a Responsible Federal Budget, which describes itself as a nonpartisan organization committed to educating the public on fiscal policy issues, calculated just how much in dollar amounts.
According to the analysis, a typical dual-income couple retiring in 2033 would see an immediate $17,400 cut in current dollar annual benefits and an immediate $13,100 cut for a typical single-income couple.
The Committee, which counts former Indiana governor Mitch Daniels and former Secretary of Defense Leon Panetta as board members, added that the cuts would differ for couples at different income levels.
“A low-income, dual-income couple retiring in 2033 would see a $10,600 cut while a high-income, dual-income couple retiring in 2033 would see their annual benefits slashed by $23,000,” it noted. “Although the cut for a low-income couple would be smaller, it would represent a larger share of their income—and so senior poverty would rise significantly upon insolvency.”
Importantly, it also noted the figures are in current (nominal) dollars, “consistent with ten-year budget scoring practices and how benefit cuts would be seen in real-time. Adjusted for inflation, we estimate a typical dual-income couple would face a $14,000 cut, while low-income couples would face an $8,500 cut and high-income couples would face a $18,500 cut.”
It concluded by noting 2024 presidential candidates who pledge not to touch Social Security are endorsing an eventual 23% benefit cut for 70 million retirees.
In related news, The Senior Citizens League (TSCL) recently estimated that the Social Security cost of living adjustment (COLA) for 2024 will be roughly 3%.
