As the dust settles from the recent Republican Presidential debate, one topic was mostly absent from the conversation – social security benefits. The program is slated to run out of cash by 2033, a year earlier than predicted. People ages 50 and older are paying attention.
A recent survey from the Nationwide Retirement Institute finds that 75% of this group is worried about what will happen in their lifetimes to their Social Security benefits. That number is up from 66% nearly a decade ago. What happens if funding does run out?
Benefits will still be paid but reduced. According to financial experts, the government will continue to collect payroll taxes from employers and workers. However, if the fund is depleted, benefits would immediately drop 25%, according to Social Security Administration's Chief Actuary Steve Goss.
A benefit reduction could have dire consequences, especially for low-income earners. Because Social Security pays a larger share of their earnings, a reduction could mean significantly lower incomes for those already experiencing hardship.
Experts say to avoid running out of funds, payroll taxes may be increased, or eligibility, payment amounts, and frequency of payments will have to be reduced.