Though Social Security’s full retirement age has increased from 65 to 67 over the past two decades, the Social Security Trust Fund began incurring cash flow deficits in 2010.1 Due to the Covid-19 pandemic, the Fund is now expected to be depleted in 2033, according to the most recent Social Security and Medicare Board of Trustees Annual Report. 2
When the fund is depleted, total Social Security payouts would be limited to the amount of dedicated tax revenues received each year. Barring significant changes to the program, this would result in an approximately 24% reduction in benefits.3
Yet retirees and workers surveyed by the EBRI in 2021 overwhelmingly expected that Social Security would provide future benefits that were at least equal to current benefits.4
In reality, many retired Americans rely on Social Security as their primary source of income, and costs for those retirees continue to rise. The Senior Citizens League reported in November 2020 that two-thirds of retirees spend nearly a quarter of the average monthly Social Security benefit on medical care costs, and a third of those surveyed spend more than $1,000 a month for medical expenses.5
Legislators have proposed a variety of solutions to preserve the Social Security Trust Fund and ensure benefits will continue far into the future. Strategies that have been examined include increases in payroll taxes, changes in the way cost of living increases are calculated, and investment modifications to increase the interest earned by the Fund’s reserves.6
The Social Security 2100 Act, first proposed in 2014 by U. S. Congressman John B. Larson and recently re-introduced as The Sacred Trust Act in October 2021, may have enough support to be passed. Among other changes, the Act would increase the payroll tax on earnings above $400,000, and adopt a new Consumer Price Index for the Elderly (CPI-E) that more closely measures the spending habits of the elderly, and would allow the program to stay solvent through the end of the century.7
In other words, American retirees for the next few generations could again count on Social Security.