Social Security bosses reveal potential massive cut to retirement income as Congress desperately scrambles to not run out of cash

The chief actuaries of Social Security and Medicare testified before a House committee about looming financial challenges that could run out of funding by 2035.

Social Security relies on its trust funds to provide monthly benefit checks to about 70 million Americans.

But an aging population is driving up the cost of the program, as a smaller share of people pay into it, and expenses exceed revenues.

This means that if the funding gap is not resolved by Congress, future beneficiaries could receive $325 less per month. Medicare is also expected to run dry by 2036.

House Budget Committee Chairman Jodey Arrington, R-Texas, said in his opening remarks Thursday: “My prayer is that we unite – not as Republicans, not as Democrats – but as Americans.

“I’m probably not going to get everything I want to fix it, they’re probably not going to get everything they want, but we have to do it or there will be automatic cuts.”

Trustees for Social Security have a report earlier this year showing that the program can only pay out full benefits for the next eleven years.

Although this was a year later than previous estimates, bosses still urged Congress to take steps to “extend the financial health of the trust fund for the foreseeable future.”

When trust funds are depleted, programs can only pay out what they receive through incoming payroll taxes. Under current law, this means that benefits are automatically reduced.

Social Security’s Old-Age and Survivors Insurance (OASI) trust fund is expected to be depleted by 2033, when only 79 percent of planned benefits would be payable. Fox Business reported.

If this were merged with the Disability Insurance (DI) fund, the date would move to 2035 and only 83 percent of benefits would be payable.

Based on the average monthly benefit of $1,907 as of January this year, a 17 percent reduction would mean beneficiaries would receive $325 less per month, or $3,900 less per year.

This could be significant for millions of disabled Americans, and for those who rely on Social Security as their sole income in retirement.

The Medicare Health Insurance (HI) trust fund, which covers care after hospital stays, is expected to dry up by 2036, when 89 percent of benefits would be affordable.

Social Security Administration chief actuary Stephen Goss said at the House Budget Committee hearing that lawmakers from both sides have proposed policies aimed at solving the programs’ financial problems.

Republicans have proposed raising the retirement age, while Democrats have offered a payroll tax increase as a possible solution.

He said, “As many, many members of Congress are proposing to attack Social Security, we have a large list of provisions and proposals on our website that we can look at and choose from.

“A committee that would go through all those options and come to a consensus would be a very good thing.”

Ranking Member Brendan Boyle, D-Pa., in his opening statement, emphasized the need for reforms to strengthen these safety nets for Americans going forward.

“I believe deeply in Social Security and Medicare and what they represent, even beyond the paychecks, what they say to the American people is that we have a fundamental obligation to everyone in our society that we are going to take care of you when you need it ‘, he said.

“Congress must ensure that these programs have the resources to continue paying full benefits,” he added.

House Budget Committee Chairman Jodey Arrington, R-Texas (pictured right, with Brendan Boyle, D-Pa in March) made opening remarks at the hearing

In what has been called the “silver tsunami,” about 4.1 million Americans will turn 65 in 2024, and every year through 2027

Social Security’s uncertain path is a concern for many, especially those nearing retirement age.

In what has been called the “silver tsunami,” about 4.1 million Americans will turn 65 each year in 2024 and through 2027, according to a report of the Alliance for Lifelong Incomes.

Some experts warn that politicians are running from the problem rather than trying to solve it – and it is crucial that they act now.

Maya MacGuineas, chair of the Committee for a Responsible Federal Budget, said earlier this year: “We are driving straight into this mess, despite all the warning bells and alarm bells that the Trustees and others have been ringing for decades.

‘Every year we get closer to the deadline, it seems like we are further away from the solutions.’