This funding gap could push Social Security toward insolvency, meaning it may not have enough money to pay full benefits in the future, as per The Mirror US. One proposed solution is to slow down COLA increases for wealthy retirees to save money.
Social Security funding crisis
The Committee for a Responsible Federal Budget said this move could save $115 billion over ten years. This comes at a time when Donald Trump has promised the “largest tax cuts,” which could save Americans up to $20,000 next year. Another idea is to raise taxes to support Social Security, but Americans strongly oppose this option.
A survey found that 70% of Americans believe Social Security benefits will be cut in the future. The same survey showed that 30% think Social Security will completely disappear before they retire, as stated by The Mirror US. Even with these fears, Social Security remains popular, with 83% of people saying they support the program. Still, Americans are divided on how to fix the problem and do not agree on paying more taxes.
Tax hike backlash
The Committee for a Responsible Federal Budget warned, “The retirement trust fund is seven years from exhaustion, and the theoretically combined trust funds are nine years from running out.” The group also said, “Without legislative action, retirees will face an estimated 24 percent across-the-board benefit cut in late 2032”, as noted by The Mirror US. The Social Security Administration is expected to run out of full funding by 2033 and would only be able to pay 77% of promised benefits.
The average monthly Social Security payment is about $2,008, but this could drop to around $1,546 if cuts happen. When asked if they would accept higher taxes to avoid a 25% benefit cut in 2033, only 35% said yes, while 34% were unsure. In general terms, 58% said they support higher income taxes, and 63% said they support higher payroll taxes if needed. About 55% agreed with raising payroll taxes from 12.4% to 16.05%—until they saw the real cost.
When told this would mean paying $1,300 more per year, 77% rejected the idea. When shown the real estimate of about $2,600 per year, 79% still refused to support it. Americans were more open to small tax increases, with 68% supporting an extra $200 per year and 61% backing $600 more, according to the report by The Mirror US. Opposition to the $2,600 tax hike was strong across all income levels. People earning $150,000 a year were just as unwilling to pay the extra $2,600 as those earning $30,000 a year.
FAQs
Q1. Is Social Security really running out of money?
Yes, experts warn the trust fund could run short by 2033, leading to smaller payments if no action is taken.
Q2. Why are Americans rejecting a $2,600 Social Security tax hike?
Many people support Social Security but do not want to pay thousands more in taxes each year to save it.