Social Security Benefits to Be Slashed by 23 Percent: Here's Why

On a previous episode, we discussed how social security recipients are about to get a 2.5 increase in their benefits starting in the year 2025, which is of course great in the short term. However, the underlying reality is that the social security program as a whole is quickly approaching the point of insolvency. In fact, according to this new analysis right here of the current state of the program, within the next nine years, if nothing changes, the average retired couple will see their benefits get reduced by $16,500. The benefits will get reduced by this large amount, while at the same time, inflation over the next nine years will naturally make goods and services a lot more expensive. Now, this report right here was published last month by the Committee for a Responsible Federal Budget. It's a nonpartisan organization that studies and analyzes the federal budget. And after looking into it, they found that the Social Security Trust Fund is rapidly approaching the point of insolvency. Specifically, they found that by the year 2033, which is just nine short years from now, the Old Age and Survivors Insurance Trust Fund, which is what currently funds the social security program, will completely deplete its reserves. And once that happens, once the Social Security Trust Fund runs out of reserves, by federal law, it mandates that, quote, the Old Age and Survivors Insurance Trust Fund can only spend in amounts equal to incoming trust fund revenue, which means that all 70 million retirees, dependents, and survivors, regardless of age, income, or need, will see their benefits cut by 23%. That is a requirement by federal law, a 23% cut across the board, meaning that you've been taxed your entire life in order to put money into Social Security, but when it comes time for you to cash out your benefits, a quarter of that money will just be cut. And this cut will differ for different couples according to their income levels. In fact, within this report, they include a graph, you can see it up on your screen, showing the different dollar amount losses that Americans would experience based on their income. And so on that graph, the blue bar represents a single income couple, while the orange bar represents a dual income couple. And as you can see, if you are a low income couple, you stand to lose about $10,000 in benefits. A medium income couple stands to lose close to $17,000 in benefits, while a high income couple stands to lose about $22,000 in Social Security benefits per year. And what's really worth mentioning here is that even though the dollar amount that's being cut for the low income couple would be smaller, it would represent a larger share of their overall income, meaning that after Social Security trust fund becomes insolvent, you will see a corresponding spike in the rate of senior poverty. Now, the reason that the Social Security program is being insolvent is multifaceted. To start with, when the program as a whole was introduced by FDR, Social Security, it only provided for retired, unemployed, and disadvantaged Americans. But since then, the program has ballooned to cover almost everyone, the payouts are larger, and it now includes a disability benefit, which many people take advantage of. And on top of all that, back in 1965, Social Security got into the business of health insurance with the introduction of Medicare and Medicaid. Furthermore, due to the declining birth rate alongside the massive amount of baby boomers entering retirement, the ratio of workers per beneficiary has declined tremendously. For instance, back in the 1960s, each Social Security beneficiary was supported by 5.1 workers. However, currently, that number is trending towards 2.1 workers per beneficiary, meaning in practical terms that the program now has to support ever more people, while at the same time, there are comparatively less people supporting the program. And what this all amounts to is a real looming disaster. Let's go through the financials to explain why. For several decades, the Social Security administration was really flush with cash. All American workers across the board, they pay a 6.2% tax on their income into Social Security, which is then matched by their employer. And so basically, you pay 6.2% and your employer pays 6.2% on your behalf, for a total of 12.4%. If you're self-employed, you just yourself pay 12.4%. And for about 30 years, the Social Security administration, they took in more money than they gave out, which is why they established something known as the Old Age and Survivors Insurance Trust Fund, and they invested the excess money in order to get a return. Most of their investments were in U.S. Treasury bonds. However, starting in the year 2010, the money that they were taking in through taxes was no longer sufficient to cover the payments that were going out. And so starting in 2010, the Social Security administration, they began to use the interest that they were earning on the trust to pay out the seniors, meaning that they went from having so much tax revenue that they had enough left over to invest, to instead now needing to dip into their investments to pay out the seniors. And since the year 2010, this practice just continued, with the shortfall just getting larger and larger and larger. By 2016, there was a $75 billion deficit, which was covered by the interest on the trust fund. By 2019, the interest on the fund covered an $80 billion deficit. And here's where things get a lot worse. Starting three years ago, in 2021, the interest by itself was no longer enough to make up for the shortfall, and the Social Security administration had to start dipping into the actual principle in the trust fund. And according to this report, this situation can only last for about nine more years, at which point the trust fund will completely run out of money. And once those reserves are gone, according to federal law, the Social Security benefits being received by the people will have to be reduced by 23%. All right, just to pause here for a super quick moment. Listen, it's obvious that the financial system is not looking too great. After being pumped up with trillions of virtually free government dollars for many, many years now, well, the stock bubble might actually burst in the near future. And in that process, unfortunately, it could take away the nest egg of anyone who happens to be exposed to it. And so consider taking this opportunity to diversify into something which is beyond the grasp of Washington, D.C. and Wall Street, physical gold and silver. And the best company to use, in my opinion, is the sponsor of today's episode, American Hartford Gold, who I should mention is also my own personal gold and silver bullion dealer. And besides myself, they have thousands of five star reviews from other Americans, and they also have an A plus rating with the Better Business Bureau. And working with them is rather simple. They have a huge selection of coins, bars and rounds to choose from. They have super friendly staff who you can call and they can set up either gold delivery directly to your doorstep, or they can even set you up in a gold IRA. And lastly, best of all, if you tell them the Romans sent you, they will throw in a free gold coin with your first qualifying purchase. So give them a call. The number is 866-242-2352. That's 866-242-2352. Or you can simply text Roman to 65532. I'll also throw a link to their web page. They'll be down there in the description box below. And so just to give you a quick summary, for about 30 years, the taxes that the Social Security Administration was able to collect covered all of the benefits that they were able to pay out. Plus, it left a little bit left over for the agency to be able to invest. They set up a fund and they were able to earn, you can say, a decent return on their investment in the form of interest payments from U.S. Treasury bonds. However, eventually, because of the growing amount of people receiving the benefits, as well as a growing size of the retiring population, especially compared to the number of workers, the taxes by themselves no longer covered the benefits. And so the agency, they had to start using the interest that they earned on their trust fund to cover the Social Security payments that were going out. But then eventually, even that wasn't enough. And so now the agency is using the taxes they collect, the interest they generate, as well as the principal in the actual trust fund to pay out the benefits every single year, which, as you can imagine, is a non-sustainable model. Eventually, in exactly nine years, the money will run out. And perhaps the most ironic thing about all of this is that our political system has devolved into such a, you can say, kabuki theater, that while on the surface, both major political parties claim to be pro-Social Security, and they make a special point to express that support for Social Security by telling the public that they won't touch it, but by not touching it, it means that by default, the program will collapse by itself, which is something that this report right here made a special point to mention. Here's what they said in regard to the current state of political affairs. Quote, while Vice President Harris has promised to protect Social Security, and former President Trump has pledged to fight for and protect Social Security, neither candidate has offered a comprehensive plan to address the impending solvency challenge. In fact, some of President Trump's proposals, especially to end taxation of Social Security benefits, would significantly worsen these challenges. And indeed, if you right now head on over to Kamala Harris's 2024 campaign website, you will find a subsection on Social Security which states that she will strengthen Social Security and Medicare for the long haul by making millionaires and billionaires pay their fair share in taxes, and that she will protect Social Security against relentless attacks from Donald Trump. However, if you then head on over to President Trump's website, his platform states that he will, quote, fight for and protect Social Security and Medicare with no cuts. And then also, when he was directly asked about it, Trump said the following, quote, we need to save Social Security. The Democrats are looking to destroy Social Security. We're not going to let them do it. And so there you have it. It appears that Social Security is something like a hot potato that everyone needs to claim allegiance to in order to get the votes of the 70 million people who rely on it. They both claim that the other side is looking to destroy it, while at the same time, no one appears to be actually interested in solving the fundamental underlying problems with the system, which again, will run out of money in nine short years. So that is the situation as it currently stands. If you'd like to dig through this report for yourself, I'll throw a link to it. You'll be able to find it down in the description box below if you're the type of person that likes to dig into the wheat. And as you're making your way down there to that description box, take a short detour to smash those like and subscribe buttons so that this important content can reach ever more people via the YouTube algorithm. And then until next time, I'm your host Roman from The Epoch Times. Stay informed. Most importantly, stay true. Are you looking for analysis of the 2024 election based on actual facts and policies? Well, take a look at this. Our team of editors prepared this special infographic, which gives you a fact-based summary of where the candidates stand on critical issues like taxes, healthcare, infrastructure, immigration, the Second Amendment, China, and so, so many others. This is a must-have overview for all Americans who want to be truly informed. And now you can get your own digital copy today. Just click on the button right below this video, and you can get unlimited access to all The Epoch Times digital content, as well as a special digital infographic for just a single dollar a week. Every single day, we cover the latest election-related news, we publish in-depth analysis, and we give you policy comparisons between the two parties that are based on actual facts. And so again, click on the button below this video, get your digital infographic, check out our nonpartisan reporting, and stay truly informed.