Social Security: Most Americans unaware of financial shortfall

(NewsNation) — Millions of Americans could see their Social Security benefits cut in just nine years, and according to a recent report, most people have no idea.

A new Peter G. Peterson Foundation survey found that only 30% of Americans knew that Social Security benefits would be slashed by 21% in nine years if there were no reforms.

That cut would amount to nearly $17,000 per year for the average couple, the report said.

After learning about the looming cuts, 97% of respondents agreed it’s important for leaders elected this fall to strengthen the federal retirement program so it’s fully available.

“Voters understand that ‘not touching’ Social Security is not an option because automatic cuts are unacceptable and waiting only makes the problem more costly and difficult to solve,” Michael A. Peterson, CEO of the Peterson Foundation, said in a statement.

The latest survey reveals a disconnect between the Social Security funding crisis and Americans’ understanding of a problem that lawmakers have continued to kick down the road.

Due to the country’s aging population, Social Security spending is now outpacing revenues. In 2022, Social Security spent $147 billion more than it brought in — a gap expected to widen to $670 billion in 2033, according to the Peterson Foundation.

This year, an average of almost 68 million people will receive a Social Security benefit each month, and by 2035, the number of Americans aged 65 and older is set to hit 75 million.

Congress could address the funding dilemma by either raising payroll taxes, which account for most of the program’s income, or trimming benefits. However, both options have proven to be politically thorny.

The last major Social Security overhaul came roughly 40 years ago when the federal government gradually raised the eligibility age from 65 to 67. When that happened in 1983, Social Security insolvency was just months away.

Today’s situation is much less urgent, but according to the Brookings Institution, the changes that need to be made now are significantly larger than they were back then. Delaying reforms will require even larger changes.

In May, the annual Social Security and Medicare trustees report came with a bit of good news. Social Security’s go-broke date was pushed back a year from the previous estimate.

Even still, the Social Security Board of Trustees projects that the Social Security Old-Age and Survivors Insurance (OASI) trust fund will become insolvent in 2033. That means the program won’t be able to cover expenses and, without any changes, will lead to a 21% benefits cut to the main Social Security trust fund.

The Associated Press contributed to this report.