Social Security faces growing shortfall: Benefits could drop by 23% by 2033

Report: Spending strains social security program

If Congress does not act, Social Security benefits could be cut by nearly a quarter within eight years. FOX 13's Craig Patrick reports. 

TAMPA, Fla. - If Congress does not act, Social Security benefits could be cut by nearly a quarter within eight years. 

What we know:

Social Security was created under President Franklin D. Roosevelt to lift elderly Americans out of poverty. Workers pay into the system through payroll taxes, which fund monthly retirement benefits. 

For decades, interest from the Social Security trust fund helped cover shortfalls, but since around 2019, payouts have exceeded revenues and interest earnings. Current projections show the trust fund could be depleted by 2033, which would lead to a potential 23% reduction in benefit payments if no action is taken.

The backstory:

Over the past 90 years, Americans are living longer, and medical improvements have increased retirement spans, straining the Social Security system. Spending has exceeded income since 2010, and with the funds now being drawn down, lawmakers face a narrowing window to prevent a reduction in benefits.

What they're saying:

Former House Speaker Paul Ryan emphasized the need for reforms: "You need to make changes for those of us in the younger generation…so that we don’t go bankrupt as a country and these programs exist for them, but also so you can cash-flow the current promises to current seniors." 

Senator Bernie Sanders highlighted the inequity in contributions: "Right now, as we all know, a billionaire pays the same amount into the Social Security trust fund as somebody who makes $176,000 a year."

Policy Options:

Some proposals focus on adjusting benefits for future recipients while protecting current retirees. Others suggest raising the cap on taxable wages, so high earners contribute more. 

Lawmakers could also consider broad payroll tax increases, though support is limited given current inflation and economic pressures.

Privatization has little political backing due to the risk of market losses affecting retirees’ savings.

Why you should care:

If Congress does not act, Social Security benefits could be cut by nearly a quarter within eight years. This would directly affect millions of seniors who rely on these payments for basic living expenses.

What's next:

 Lawmakers must choose a path forward, whether adjusting benefits, increasing taxes, or combining both, to prevent a crisis that could arrive sooner than anticipated.