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Photo of David Dopkin

Will Social Security benefits be cut next year?

On Behalf of | Mar 15, 2017 | Supplemental Security Income

In 2016, the Social Security Board of Trustees issued a report warning that by 2020, the program will essentially bankrupt by 2034. Currently the program retains $2.8 trillion to pay out to beneficiaries, but by 2020 they will have to start tapping that fund and resort to a “budget neutral” status. That means that only the money being collected in payroll taxes can be paid out and people will start receiving less and less.

Is entitlement reform going to affect beneficiaries?

This means that there is even more pressure on lawmakers to respond to the need for entitlement funding. President Trump said during his campaign that he was against making changes to Social Security funding. Instead, he has said that would prefer to help average workers enjoy a greater income, thus enabling more money to be collected through payroll taxes. He noted that he planned to do this through tax reform.

Good news and bad news

Right now, there is no plan to cut benefits in 2018. That’s great news for current recipients of Social Security benefits. President Trump’s Treasury Secretary Steven Mnuchin announced that the administration’s focus will be on tax reform rather than entitlement cuts.

On the other hand, Republican lawmakers may have another plan in store. Those who are working on next year’s budget are among the many legislators who want desperately to modify or even cut Social Security altogether. Fiscal conservatives in Congress are arguing strongly for overhauling entitlements now that they have control of both the legislative and executive branches.

Will you have to wait longer to retire?

Perhaps. If some lawmakers get their way, the retirement age could be raised to 70, meaning that you won’t be eligible to 100% of your monthly benefit until then. Future generations may be affected, as they may have to wait longer to retire or accept less of a payout.

Still other lawmakers propose privatizing Social Security, either partially or fully. This would require you to put money into your own retirement account and manage it yourself. Some see this as a way to put more control in your hands as a retiree; others see it as a riskier way to handle the funds that are rightfully yours.