NEW YORK ( MainStreet) -- A large block of future retirees can expect to see their Social Security benefits dwindle by 19%, thanks to a 29-year-old piece of legislation that curtailed government retirement benefits. If the feds don't find other ways to shore up the pension system, it means bad news for millions of Americans under 50. There's no doubt Social Security is in big trouble financially. According to the Congressional Budget Office, Social Security coffers are expected to run dry by 2037, and this year alone the U.S. government will collect $45 billion less in taxes than it shells out. By 2016, Social Security is expected to fall permanently into deficit mode, so it's no surprise future beneficiaries may see their Social Security cut.
With benefit cuts becoming the norm, the future looks bleak for millions of Americans under 50.
A new study by the National Academy of Social Insurance estimates that some cuts have already been locked in, thanks to changes in Social Security's payment structure that date back to the 1980s. Americans born after 1960 have been staring down the barrel of a 19% benefits cut, and that could just be the beginning. If Congress doesn't pare benefits across the board, the study argues, future Social Security beneficiaries could be in even bigger trouble. "Social Security benefits are already being cut more than many people realize," says Virginia Reno, NASI's vice president for income security. "Cutting benefits further is not necessary to preserve Social Security for future generations. Other alternatives merit consideration by policymakers." That's what Congress did in 1983, and it must take similar action again, NASI says. Back then, Congress took steps to ensure the solvency of the nation's most widely used retirement savings program, raising the full-benefit retirement age from 65 to 67, a change that results in a 13.3% reduction in benefits, taxing part of benefit income, which results in a 5.1% benefit cut, and delaying the cost-of-living adjustment by six months, resulting in a permanent 1.4% cut.