Social Security

Time -  Retirees could face a huge cut to benefits in the next seven years if a new funding solution isn't found for Social Security, a new report from the Committee for a Responsible Federal Budget (CRFB) has outlined.

The committee has estimated that a couple with medium dual income retiring in 2033 would lose $18,100 per year in benefits if the trust fund conundrum is not solved. For a single income couple, this would be $13,600.

Social Security is relied on by tens of millions of Americans who collect monthly benefits, which help form the bedrock of income in retirement. The program is funded by a combination of payroll taxes and government reserve funds.

But according to the latest Social Security Trustees report, the program's two trust funds—the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) funds—when combined are projected to reach insolvency by 2034. At that point, benefits would rely entirely on incoming payroll taxes, resulting in an automatic cut of approximately 21 percent, unless Congress intervenes.

The size of future Social Security benefit cuts would vary significantly depending on a couple's age, marital status, and employment history. Dual-earner couples with low incomes would face a slightly smaller cut of around $11,000 per year, while high-income couples might experience reductions approaching $24,000 annually.

While the dollar amount is lower for low-income couples, the impact would be more severe relative to their total income and lifetime earnings.