00:00The Social Security Trust Fund is now projected to be depleted by 2033.
00:05This doesn't mean benefits will stop.
00:08But without legislative action, they face a significant cut of approximately 23%.
00:13Several factors have accelerated this timeline.
00:16The 2025 report from the Social Security Board of Trustees moved the depletion date up by a year.
00:22Rising health care costs and expanded eligibility play a role,
00:26as does the repeal of offsets under the Social Security Fairness Act, enacted on January 5, 2025.
00:33This law eliminated the windfall, elimination, provision, and government pension offset,
00:39providing significantly larger benefit payments for nearly 3 million Americans,
00:43including retired teachers and police officers.
00:46While beneficial for these individuals, it's projected to exhaust the Social Security Retirement Trust Funds sooner.
00:52We're also seeing an aging population, coupled with low birth rates, slower wage growth, and reduced immigration,
00:59all contributing less in payroll taxes.
01:02Social Security operates as a payezugo system, with current workers funding current beneficiaries.
01:07The ratio of retirees to workers has drastically increased,
01:11from about 18 retirees per 100 workers in 1982, 30 retirees per 100 workers today.
01:18Beyond the trust fund's depletion, other recent policy updates could affect your payments.
01:24Overpayment clawbacks have increased,
01:26with the default withholding rate for recovering overpayments jumping from 10% to 50%.
01:31The government has also resumed collecting undefaulted federal student loans,
01:35with garnishment of federal benefits, including Social Security.
01:39Beginning in June, this could affect an estimated 452,000 Social Security recipients aged 62 or older.
01:47You should also be aware of taxes on Social Security benefits.
01:51Federally, up to 85% of your benefits could be taxable,
01:55if your combined income exceeds certain thresholds.
01:58These thresholds haven't been updated for inflation in over 30 years,
02:02leading more retirees to face federal taxes.
02:05Additionally, nine states still tax a portion of resident Social Security benefits depending on income.
02:11West Virginia will eliminate this tax starting in 2026,
02:15while delaying benefits until age 70 maximizes.
02:18Your monthly payment increasing by 8% for each year.
02:22You delay after your full retirement age, claiming early might make sense.
02:26If you have immediate financial needs or don't expect to live long,
02:29the looming uncertainty is already changing behavior,
02:32with a 13% surge in early Social Security claims.
02:36Policymakers have several options to ensure the program's solvency,
02:40including raising more revenue by increasing the payroll tax rate or lifting the income cap,
02:45adjusting future benefits by reducing them for high earners or raising the claiming age,
02:50broadening the contributor base through increased immigration or birth rates,
02:55or reallocating funds.
02:56Whether your benefits will be cut depends on future legislative action.
03:00You can also create a free online Social Security account at ssa.gov
03:04to stay informed about your benefits.
03:06Always consider your personal health, financial needs,
03:10and longevity expectations when making decisions about when to claim Social Security.
03:16Given this complex and evolving situation,
03:19it's highly recommended to consult with a fiduciary financial advisor for personalized guidance.
03:24Money explains.
03:25Money explains.
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