The average retired worker receives about $2,000 per month in Social Security benefits, according the Social Security Administration. (Adobe Stock)
Nearly 69 million Americans receive Social Security benefits, including more than 2 million Michiganders, and a new trustees report warns Congress has less than a decade to address a projected funding shortfall before automatic benefit cuts could take effect.
The report projects the combined Social Security trust funds will be able to pay full scheduled benefits until 2034.
Bill Sweeney, senior vice president for government affairs at AARP, said a reduction in benefits could have ripple effects across Michigan.
“If Congress doesn’t fix this, if Congress allows an automatic cut to go into effect, it would be absolutely devastating for the $53 billion that Social Security contributes to Michigan’s economy every year,” Sweeney said.
Sweeney said he remains optimistic, noting Congress has never allowed Social Security to miss a payment in the program’s more than 90-year history. While the report projects a future funding shortfall, he said there is still time to act.
Experts say Social Security is not expected to run out of money. Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, said the program would continue paying benefits at reduced levels if Congress does nothing.
Richtman said a key factor behind the projected shortfall involves how Social Security taxes are collected.
“So many of the wealthier people among us are reaching the cap of $184,500, and after that they don’t pay any more payroll tax,” Richtman said. “That is one of the biggest reasons why we’re in this situation.”
Richtman said it has been 40 years since Congress made major changes to Social Security. He said lawmakers have several options to address the projected shortfall, including raising or eliminating the cap on wages subject to Social Security payroll taxes.
