Future of Social Security Benefits in Question

SS benefits are on par for a 31% reduction by 2029, CBO reports.

The Social Security Administration is on course to run out of money, says the Congressional Budget Office (CBO.)

CBO projected a 31% reduction in scheduled payable benefits by 2029 and a 29% reduction by 2060, given current credited outlay limits.

The CBO prepared long-term projections and concluded if the current revenues were insufficient to cover benefits, the Social Security Administration would no longer be permitted to pay full benefits.

“After increasing for several years, the required reduction would abate as people in the baby-boom generation died,” says the report. “And because life expectancy is anticipated to continue to rise, by 2080, [benefits] would need to be 34 percent lower.”

Most (73%) of the 61 million people who receive Social Security benefits are retired workers or their spouses and children, and another 10% are survivors of deceased workers.

“In fiscal year 2016, total outlays exceeded noninterest income by about 7 percent,” according to the report. “If current laws governing taxes and spending stayed the same and if benefits were paid as scheduled, outlays for the Social Security program would rise from 5.0 percent of gross domestic product (GDP) in 2016 to 5.9 percent in 2026 and to 6.3 percent in 2046; they would exceed tax revenues by 33 percent in 2026 and by 42 percent in 2046.”

Spending for Social Security benefits totaled $905 billion in FY 2016, nearly 25% of federal spending.

Shortfall projections were increased because of lower projected interest rates, GDP, and taxable payroll amounts, and to the ages retirees choose to claim Social Security benefits.