As the 2024 election cycle begins to heat up, the GOP has announced a 2025 spending proposal with adjustments to the retirement age involving Social Security. According to some projections, if nothing changes, Social Security will begin to run short of funds within the next 10 years.
Yahoo Finance Senior Columnist Rick Newman joins Wealth! to break down the current situation with Social Security and the key points from Republican lawmakers' budget proposal.
For more expert insight and the latest market action, click here to watch this full episode of Wealth!
Editor's note: This article was written by Nicholas Jacobino
Video Transcript
- Well, it is an election year. And we're already being bombarded with talking points and promises that may or may not pan out. The latest, Republicans released a 2025 spending proposal with quote, "modest adjustments to the retirement age." To break this down, and what it could mean for your retirement Yahoo Finance reporter Rick Newman is here. Hey, Rick.
RICK NEWMAN: Hey. Yeah, so Biden-- President Biden attacked this right away, calling it an extreme idea and saying, basically, they just want to wreck Social Security. We kind of get this every election year. You know, Republicans say they have plans for how to reform Social Security. Democrats say they're going to take Social Security away. It's a lot of fear mongering.
People need to know you can't change Social Security, unless Congress passes a law. So this is-- no one's going to do this on the sly. But look, I mean, Social Security is going to start running short of money within about 10 years on current projections. And Medicare, the health program for seniors, is going to start running short of money probably a couple of years sooner than that.
They're not going to run out of money completely, but if nothing changes, they're not going to be able to pay all benefits in full. So I mean, this is one of the big problems everybody in Washington has known is coming. The date fluctuates a little bit based on the state of the economy and stuff. But at some point, we're going to have to make changes to Social Security and Medicare.
And almost assuredly, it is going to involve some combination of tax hikes, which is how President Biden wants to solve the problem, and modest changes in benefits. And that is probably going to include a gradual increase in the eligibility age, which, by the way, we've done before. I mean, in a 1983 law, the eligibility age for full, but Social Security benefits used to be 65. A 1983 law changed that to 67.
But that went into place gradually over a span of 30 years. So I mean, it's very plausible we're going to see something like that again. But nobody should panic because nobody's going to sneak, sneak a Mickey on you here. When we debate how to fix Social Security, people are going to know what's happening.
- And more likely than not, if there is continued logjam, then the likelihood of any of those bills getting through and--
RICK NEWMAN: They're going to fix this at the very last minute.
- Yeah.
RICK NEWMAN: But we're going to be talking about it for a long time. So get your brain around the fact that we're going to have to do something here.
- Rick, thanks so much for breaking this down for us.
