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Social Security Cuts: 4 Key Updates Retirees Should Know for September 2023

The Old Age and Survivors Insurance (OASI) Trust Fund within Social Security continues to be the center of attention due to its impending depletion.

This depletion is anticipated to occur within approximately ten years, leaving Social Security reliant solely on payroll taxes for financial sustenance. Currently, these taxes account for around 77% of benefit funding.

Here are four essential Social Security updates that retirees should be aware of for September 2023:

1. Projected Funding Shortfall Impact: The nonprofit Committee for a Responsible Federal Budget (CRFB) has quantified the potential consequences of the forthcoming OASI fund depletion. 

The CRFB’s August 8 report estimated that retirees could face substantial yearly reductions in income. For a typical dual-income couple newly retired when the OASI fund becomes insolvent (likely by 2033), the immediate cut could amount to $17,400 per year. Similarly, a typical single-income couple might experience a projected reduction of $13,100.

2. Republican Presidential Candidates’ Positions: During a recent Republican presidential candidate debate in Milwaukee, 2024 candidate and former New Jersey Gov. Chris Christie highlighted the financial challenges facing Social Security. 

He asserted that the program would be bankrupt in 11 years and called for the consideration of cuts. While some candidates like Donald Trump oppose benefit cuts, others like Ron DeSantis and Nikki Haley have suggested raising the retirement age for younger workers, which effectively trims benefits by delaying full access. Former Vice President Mike Pence has proposed privatizing Social Security.

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The Old Age and Survivors Insurance (OASI) Trust Fund within Social Security continues to be the center of attention due to its impending depletion.

3.2024 Cost-of-Living Adjustment (COLA) Estimate: With a current inflation rate hovering at approximately 3%, experts predict a corresponding COLA of around 3% for 2024. The Senior Citizens League estimates a similar figure based on July’s inflation data. 

This projection means Social Security recipients should anticipate a less substantial increase in their monthly payments for 2024 compared to the 8.7% COLA of the previous year. 

However, this year’s hurricane season could potentially influence gas prices and impact the inflation index that determines the COLA. A more severe hurricane season may lead to a COLA exceeding 3% in 2024.

4. Average Social Security Benefit Figures: The average monthly benefit for retired workers as of July 2023 stands at $1,838.58, according to the Social Security Administration. 

Meanwhile, the average monthly benefit for spouses of retired workers is $891.32. While these figures tend to remain relatively stable, periodic adjustments do occur, reflecting changing economic conditions.

As Social Security navigates impending challenges, retirees and policymakers alike are closely watching these developments for their implications on the program’s sustainability and retirees’ financial well-being.

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Source: GOBankingRates via MSN

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