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Miami Herald
30-07-2025
- Business
- Miami Herald
Warren Buffett's blunt Social Security warning is becoming reality
For many retirees, Social Security benefits are a primary income source, or even their only income source. Unfortunately for those retirees, their financial security is facing a very real and substantial threat. While Social Security is an entitlement program, and the benefits that workers collect from it are earned benefits they are entitled to as a result of paying into the system, there is a strong chance that the program will not continue working as intended. Don't miss the move: Subscribe to TheStreet's free daily newsletter The issue is one that famed investor Warren Buffett has warned about for a very long time. In fact, his warnings about Social Security date all the way back to 2005, when he responded to a question about whether Social Security was a Ponzi scheme and said, "I basically believe that anything that would take Social Security payments below their present guaranteed level is a mistake." Unfortunately, new evidence suggests that Buffett's warnings are about to become reality, and sooner rather than later. Unfortunately, there is a very real and imminent danger that the cuts Buffett warned about will happen. The Committee for a Responsible Federal Budget has released a very troubling new report demonstrating that the Oracle of Omaha knew exactly what he was talking about. Related: Warren Buffett sends blunt message on Social Security According to the Committee for a Responsible Federal Budget, the Social Security Trust Fund is just over seven years away from being insolvent. This is based on both the Social Security Trustee's report data, as well as the Committee's projections of how the One Big Beautiful Bill Act are likely going to impact Social Security. If the reserves in the trust fund are depleted, that means Social Security is only going to be able to pay out benefits from current revenue. The CRFB estimates that this is going to happen late in 2032 and that when it does, a 24% cut to benefits will be necessary. This is different from the most recent projections by the Social Security Trustees, which anticipated that benefits could be paid in full through 2035. It is based on the CRFB's analysis of the impact of the One Big Beautiful Bill. For a dual-earning couple, the cut to benefits that could happen in as little as seven years would result in an $18,100 reduction in annual income from Social Security, according to the CRFB's analysis. This is not just a small cut, it is a huge cut – and it seems to be exactly what Buffett was warning about when he said that it would be a mistake to take benefits below their current level. This would be well below that level. Related: AARP CEO sounds the alarm on Social Security Buffett made clear that while he is worried a benefit cut would be a mistake, he also thinks the situation is salvageable if Congress were to act. He has commented that "our country can easily handle the Social Security issue," and has made several suggestions for fixes, including: Increasing the maximum amount of income that is subject to Social Security tax as currently high earners pay taxes only on part of their income up to the wage base limitRaising full retirement age (although he made this suggestion in 2006 and said that 65 might not make sense, and full retirement age has already been moved later and is now 67 for anyone born in 1960 or beyond) The big question is whether Congress has the political will to make these changes, both of which have the potential to be very unpopular. More on retirement: Dave Ramsey offers urgent thoughts about MedicareJean Chatzky shares major statement on Social SecurityTony Robbins has blunt words on IRAs,401(k)s Of course, the changes wouldn't be as unpopular as hitting retirees with a huge cut to benefits that Buffett warned would be such a grave mistake. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
28-07-2025
- Business
- Yahoo
Warren Buffett's longtime Social Security warning is coming to fruition, with retirees facing an $18,000 annual cut
In just seven years, Social Security will reach a fiscal cliff that could leave millions of American retirees with drastically reduced benefits, according to a recent analysis by the Committee for a Responsible Federal Budget (CRFB). The think tank's new report projects that, unless Congress acts, Social Security's main trust fund will be insolvent by the end of 2032, triggering automatic and painful benefit cuts for everyone relying on the program. How painful? Around $18,000 less per year for retirees who depend on the program. This is not the first time the CRFB has warned about this, and it's a common refrain from no less than the Oracle of Omaha himself: famed investor Warren Buffett. The ticking clock Social Security and Medicare, the two bedrock programs supporting older Americans, are drawing closer to insolvency than many might realize. The most recent data, compiled from the programs' own trustees and enhanced by CRFB calculations, forecasts that by late 2032, Social Security's retirement program will no longer be able to pay out promised benefits in full. At that point, the law dictates that payments must be limited to the amount coming in from payroll taxes—resulting in an immediate, across-the-board benefit reduction. The scope of the cut: $18,100 shortfall for typical couples For millions of future retirees, the numbers are stark. CRFB's estimate reveals that a typical dual-earning couple retiring at the start of 2033 would see their annual Social Security benefit drop by approximately $18,100. The percentage cut is projected to be 24% for that year, instantly slashing retirement incomes for over 62 million Americans who depend on the program. The pain would be widespread but would vary by income and household type. For example, single-earner couples could see a $13,600 cut, while low-income, dual-earner couples face an $11,000 shortfall. And high-income couples might lose up to $24,000 a year. While the dollar cut is smaller for lower-income households, the relative burden is even more severe, devouring a larger share of retirement income and past earnings. Also, these cuts are in nominal dollars; adjusted to 2025 dollars, the actual cut would be about 15% less. What's causing the crisis? Social Security is funded by a dedicated payroll tax, but the gap between what goes out in benefits and what comes in through taxes is growing. The newly enacted One Big Beautiful Bill Act (OBBBA) has accelerated the timeline by reducing Social Security's revenue through tax rate cuts and an expanded senior standard deduction. According to CRFB, these policies increase the necessary benefit reduction by about one percentage point; if the changes become permanent, the benefit cuts would be even deeper. Over time, the gap is expected to worsen: By the end of the century, CRFB adds, Social Security could face required benefit cuts of over 30%, unless lawmakers shore up the program's finances. Despite these dire projections, many policymakers have pledged not to alter Social Security, promising to keep benefits untouched. But if nothing changes, the law automatically enforces cuts when the trust fund runs dry. The CRFB report urges policymakers to be candid about the situation and to work toward bipartisan solutions that secure Social Security's future. Ideas could include new revenue sources, adjusting benefits, or a combination—anything to avoid the 'steep and sudden' cut that looms for tens of millions. Without meaningful congressional action before 2032, the Social Security safety net will be abruptly—and dramatically—shrunk, so Americans approaching retirement will at least want to pay close attention to congressional action on the looming cliff. Buffett's bugbear Warren Buffett has been vocal about the dangers of Social Security insolvency and the looming benefit cuts that millions of retirees could face if action is not taken soon. The retiring Berkshire Hathaway CEO has stated that reducing Social Security payments below their current guaranteed levels would be a grave mistake, and urged prompt congressional action. Buffett, who has signed the Giving Pledge and has advocated for higher taxes on higher earners, has criticized the cap on income subject to Social Security taxes, arguing that higher earners—including himself—should contribute more. He's also suggested that Social Security's finances could partially be eased by raising the retirement age, with the 95-year-old investing legend himself working well beyond the standard end of most careers. CRFB background The CRFB is not just any think tank, either. It's a respected bipartisan institution that stretches back to 1981. Its board has consistently included former members and directors of key budgetary, fiscal, and policy institutions, such as the Congressional Budget Office, the House and Senate Budget Committees, the Office of Management and Budget, and the Federal Reserve. The CRFB regularly produces analyses of government spending, tax proposals, debt and deficit trends, and trust fund solvency (such as Social Security and Medicare), as well as recommendations and scorecards for major fiscal legislation. The CRFB has consistently advanced a centrist position on budgetary matters, regularly advocating for reducing federal deficits and controlling the growth of national debt. The organization has often criticized large spending bills that are not offset by reductions elsewhere, as well as tax cuts that are not revenue-neutral. The think tank favors reforms to federal 'entitlement' programs, especially Social Security and Medicare, aiming to make them fiscally sustainable, an emphasis that has drawn criticism from the left. For example, Paul Krugman characterized it as a 'deficit scold' when he was still with the New York Times. In the Social Security sphere, the CRFB has supported or proposed ideas like raising the retirement age, adjusting cost-of-living increases (using the chained CPI), increasing the amount of wages subject to payroll tax, and progressive indexing (in which benefits grow more slowly for higher earners). The CRFB has also weighed proposals for new revenue streams and some means-testing of benefits. On the right wing, the CRFB's proposed reforms to Social Security have drawn criticism for, as Charles Blahous of the Manhattan Institute put it, creating a structure more like 'welfare' than an earned income benefit. Still, the CRFB is widely respected in policy circles as a knowledgeable, data-driven budget watchdog, with a long track record of analysis and advocacy for sustainable fiscal policy. For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Mail
24-07-2025
- Business
- Daily Mail
Report: Grim new Social Security outlook revealed
Social Security's retirement fund is set to run short in just seven years — which could end up slashing benefits for millions of Americans by thousands of dollars a year. According to latest projections, retirees could face automatic 24 percent benefit cuts as early as the end of 2032. This means a couple who both worked would receive $18,100 less each year if they retire at the start of 2033. The new forecast from the nonpartisan Committee for a Responsible Federal Budget (CRFB), released Thursday, moves up the insolvency date for both Social Security and Medicare trust funds. A projection just last month had funds lasting until 2033, but that has already been revised. A major factor is the impact of President Donald Trump's 'Big, Beautiful Bill ', which experts warned would speed up the use of funds. Social Security relies on its trust fund to provide monthly benefit checks to around 70 million Americans. Once the reserves are exhausted, federal law requires that benefits be cut to match incoming revenues. This means payments will continue, but at reduced levels. The cuts would also grow over time as scheduled benefits continue to outpace dedicated revenues, the CRFB said. By 2099, the size of the benefit cut would grow to well over 30 percent, the nonpartisan committee said. Depending on a couple's age, marital status and work history, the actual size of the benefit cut would vary. For example, the average single-earner couple would face a $13,600 cut in late 2032, while a dual-earner low-income couple would face an $11,000 annual cut. High-income couples could see a cut of closer to $24,000. While the absolute size of the cut would be smaller for a typical low-income couple than for a high-income couple, it would represent a larger share of their income and their past earnings, the CRFB said. The depletion of Social Security's trust funds would also be compounded by the insolvency of a Medicare trust fund. The hospital insurance trust fund, which is also known as Part A of Medicare, finances health care services related to hospital stays and skilled nursing facilities for eligible beneficiaries, which is mostly those aged 65 and over. This fund is also projected to be exhausted in late 2032, cutting payments by 11 percent. The latest CRFB estimates of potential benefit cuts are somewhat larger than those put forward in the most recent Trustees' report from June . The committee blamed changes brought in by the Trump administration's 'Big, Beautiful Bill.' Despite facing bipartisan criticism, the bill was signed into law earlier this month. It extends most of the tax cuts Trump signed into law in 2017, including slashing rates on estates and for corporations. Deductions for state and local taxes, as well as business owners, are included. The CRFB said the tax rate cuts and the increase in the senior standard deduction from the bill would reduce Social Security's revenue from the income taxation of benefits, increasing the required cut by about a percentage point upon insolvency.
Daily Mail
24-07-2025
- Business
- Daily Mail
Grim new Social Security outlook revealed as checks set to shrink by huge sums
Social Security's retirement fund is set to run short in just seven years — which could end up slashing benefits for millions of Americans by thousands of dollars a year. According to latest projections, retirees could face automatic 24 percent benefit cuts as early as the end of 2032. This means a couple who both worked would receive $18,100 less each year if they retire at the start of 2033. The new forecast from the nonpartisan Committee for a Responsible Federal Budget (CRFB), released Thursday, moves up the insolvency date for both Social Security and Medicare trust funds. A projection just last month had funds lasting until 2033, but that has already been revised. A major factor is the impact of President Donald Trump's 'Big, Beautiful Bill ', which experts warned would speed up the use of funds. Social Security relies on its trust fund to provide monthly benefit checks to around 70 million Americans. Once the reserves are exhausted, federal law requires that benefits be cut to match incoming revenues. This means payments will continue, but at reduced levels. The cuts would also grow over time as scheduled benefits continue to outpace dedicated revenues, the CRFB said. By 2099, the size of the benefit cut would grow to well over 30 percent, the nonpartisan committee said. Depending on a couple's age, marital status and work history, the actual size of the benefit cut would vary. For example, the average single-earner couple would face a $13,600 cut in late 2032, while a dual-earner low-income couple would face an $11,000 annual cut. High-income couples could see a cut of closer to $24,000. While the absolute size of the cut would be smaller for a typical low-income couple than for a high-income couple, it would represent a larger share of their income and their past earnings, the CRFB said. The depletion of Social Security's trust funds would also be compounded by the insolvency of a Medicare trust fund. The hospital insurance trust fund, which is also known as Part A of Medicare, finances health care services related to hospital stays and skilled nursing facilities for eligible beneficiaries, which is mostly those aged 65 and over. This fund is also projected to be exhausted in late 2032, cutting payments by 11 percent. The forecast predicts that a dual-earning couple who retire at the start of 2033 would receive $18,100 less a year in vital benefits The latest CRFB estimates of potential benefit cuts are somewhat larger than those put forward in the most recent Trustees' report from June. The committee blamed changes brought in by the Trump administration's 'Big, Beautiful Bill.' Despite facing bipartisan criticism, the bill was signed into law earlier this month. It extends most of the tax cuts Trump signed into law in 2017, including slashing rates on estates and for corporations. Deductions for state and local taxes, as well as business owners, are included. The CRFB said the tax rate cuts and the increase in the senior standard deduction from the bill would reduce Social Security's revenue from the income taxation of benefits, increasing the required cut by about a percentage point upon insolvency. It warned if the senior standard deduction and other temporary measures are made permanent, the benefit cut would grow larger, hurting millions of Americans. 'Policymakers pledging not to touch Social Security are implicitly endorsing these deep benefit cuts for 62 million retirees in 2032 and beyond,' the committee added. 'It is time for policymakers to tell the truth about the program's finances and to pursue trust fund solutions to head off insolvency and improve the program for current and future generations.'
Epoch Times
24-07-2025
- Business
- Epoch Times
Social Security Payments Face 24 Percent Cut in Less Than a Decade Now, Group Projects
Social Security recipients face a 24 percent cut to their monthly payments in less than a decade as the trust fund dries up, according to a new analysis from the Committee for a Responsible Federal Budget (CRFB). The Social Security and Medicare trust funds, the group said, are just more than seven years from insolvency, with the group citing projections from the two programs' trustees and the impact of the One Big Beautiful Bill Act that was signed into law earlier this month.
