Social Security is celebrating its 91st birthday. It won’t live to 100, watchdog warns

Social Security marked its 91st birthday this Friday, but a leading fiscal watchdog warns that without congressional action, the program's solvency may be in jeopardy by the time it turns 100. The Committee for a Responsible Federal Budget (CRFB) highlighted that the retirement program's trust fund is set to run out in six years, leading to an automatic 22% reduction in benefits under current law.

The average beneficiary would see their monthly payments decrease by around $500, a reduction greater than the average retired household's monthly grocery expenses. CRFB President Maya Macguineas lamented, "As policymakers blow out the candles on Social Security's 91st birthday, they are doing far too little to ensure its continued longevity.

Social Security won't make it past age 97 as things currently stand—at least not in its current form."

The watchdog's warning underscores the shrinking political window for an issue that Washington has repeatedly postponed. Social Security operates primarily on payroll taxes, but declining demographics and a smaller working-age population have led to the system paying out more than it receives. Once the trust fund is spent, the program can't legally borrow money to cover the shortfall, resulting in benefit cuts.

The CRFB argues that simply replacing the missing trust fund dollars with general federal revenue wouldn't solve the core financing problem, as it would add $190 trillion to the federal debt over 75 years.

The watchdog proposes several measures to address the funding gap, such as altering the taxation of Social Security benefits, capping cost-of-living adjustments for higher earners, introducing an employer-side compensation tax, and imposing limits on benefits for some higher-income couples. The potential impact of inaction would be felt by millions of Americans, with average benefit cuts exceeding $500 in 29 states, affecting up to 22% of the population in the hardest-hit areas.

The economic damage could reach as much as 1.9% of gross domestic product. The CRFB is urging Congress to establish a bipartisan commission to develop a long-term solution, emphasizing that previous bipartisan reforms have been successful in shaping Social Security's future.