subject: Guaranteed Benefit Cuts Without Social Security Reforms [print this page] A new voice in the debate over Social Security has emerged in the form of the "Strengthen Social Security" group. Composed of a number of organizations, the group opposes the proposed reforms to the broken government mandated retirement system, including raising the age of retirement. The coalition takes this stance against the possible recommendations of the National Commission on Fiscal Responsibility in its efforts to lessen the forthcoming budget deficits, in addition to the further upshot of federal debt. If the group gets its way, the possible overhaul of the US retirement system will be stopped in its tracks; resulting in massive cuts to the benefits many retirees get from Social Security.
If nothing is done to alleviate the coming deficit in Social Security funds, benefits are guaranteed to drop. Specifically, failure to resolve the budget issues well in advance will cause the trust fund to run out around the year 2037, when low-income retirees (whose benefits are already below poverty level) and the richest retirees will see the reduction of benefits by 22% - almost a fourth of what they now receive. The sudden benefit cuts will also be felt by retirees, no matter what their states of health or finances are. Doing nothing to the current structure of America's retirement system will ensure that most people who've contributed throughout their years of work will face significant financial losses.
The retirement program's administration adds the issue of irregular paychecks to an abrupt cut in a retiree's fixed income, along with the reduction of benefits by unknown percentages. For example, a previous monthly payout of $1,000 won't be lowered to around $800 - instead, Social Security will give retirees full benefits during the months it has collected enough funds through payroll taxes, and issue no payments at all when there are inadequate funds to pay participants in full.
