Social Security benefits may be exhausted sooner rather than later, which will affect millions of current and future retirees in America.
In late April, the Social Security Administration released data outlining when funds may dry up, noting that the program would not be able to pay full benefits in 2035, at which point only 76% of benefits could be paid out.
However, this estimate did not take into account the effects of the current coronavirus pandemic.
According to new estimates by the Bipartisan Policy Institute, the outbreak may have accelerated the Social Security department’s timeline to insolvency by the end of the decade.
Taking the pandemic into account, the new projected date is closer to 2029, according to the source.
The National Institute on Retirement Security states that about 40% of Americans over 60 rely on Social Security benefits for their income.
“For years, the trustees have warned that policymakers need to act to avoid depletion of reserves in Social Security’s trust fund,” the report said. “But now that moment will arrive sooner than anyone expected,” due to the fallout from COVID-19.
As millions of Americans rely on Social Security for financial stability, the program itself relies on the strength of the economy to survive.
According to SSA, Social Security is primarily financed through a “dedicated payroll tax,” and with the pandemic crippling the job economy, it “means the Social Security trust fund reserves will be depleted sooner than previously predicted."
The Bipartisan Policy report notes it's also funded by "additional income from the taxation of benefits and interest earned on securities held by the trust funds. All three revenue sources are threatened by the current recession."
Since mid-March, when shutdowns began, the economy has come to standstill with unemployment nearing levels only seen during the Great Depression.
An additional 2.4 million filed for unemployment last week, bringing the total to 38.6 million in nine weeks, according to CNN.
FOX reports that President Trump pushed for a payroll tax cut in his next proposed coronavirus relief package, but both Democrats and Republicans have expressed concerns that it would do more harm than good.
Another contributing factor is early retirement being forced onto those who have been left without a job. FOX compares the outcome of the 2008 recession, which put the benefits fund on the path of extinction in 2037, four years earlier than previously predicted.
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