Household budgets are going to get tight for some in 2017. That is the year that Social Security benefits will be cut, in keeping with a 1983 agreement between President Reagan and the then Democrat-led Congress to stop a Social Security financing crisis.
“But that pact is pushing the limits of age-related reforms, even as a new funding crisis builds for the retirement program,” reports Investors.com.
And between 2017 and 2022 the retirement age will rise to 67.
Employees claiming benefits at age 62 from 2022 on will have a 30 percent reduction in the annual benefit that they receive throughout their lives. “If that 30 percent cut were in place today, it would shrink the available benefit for a $30,000-earner turning 62 down to the poverty level, a bit less than $12,000 a year,” reports Investor.
About 30 percent of social security beneficiaries in their early 60s depend on the program for at least 80 percent of total income, Social Security Administration data indicates.
The fact is Social Security is deep in debt. Even though the retirement age will rise, Social Security’s cash deficit is expected to reach $361 billion in 2025 from $74 billion in 2014, according to the Congressional Budget Office And the $2.8 trillion trust fund will be depleted late in 2029, after which program revenues will cover only about 75 percent of scheduled benefits.
Politicians are already jumping on the Social Security issue. In fact, NJ governor Chris Christie has said if he was president he would gradually phase out Social Security benefits for seniors with income above $80,000, with no benefits going to those earning more than $200,000.
Obviously, this will be a hot button election issue.