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Social Security beneficiaries saw the biggest cost-of-living adjustment in 40 years for 2023.
But as inflation subsides, next year’s benefit increase may not be as generous, a new estimate finds.

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Benefits’ buying power dropped 36% since 2000

The Senior Citizens League also evaluated how well Social Security benefits have kept up with rising costs and found they have fallen short.
Over the past year amid persistent high inflation, eggs were the fastest-growing cost for seniors, based on the group’s analysis of Bureau of Labor Statistics data through February. Other categories that landed in the top five fastest growing costs include apples, bread, coffee and dental visits.
Since 2000, Social Security benefits have lost 36% of their buying power, according to The Senior Citizens League’s calculations.
To be able to live as well on Social Security benefits as beneficiaries did in 2000, today’s retirees would need an extra $516.70 per month, the nonpartisan senior group found.
The updated analysis of the loss in buying power — measured from January 2000 through February 2023 — improved from a 40% decline found in last year’s study. Yet the slightly improved 36% loss in buying power is still one of the deepest losses recorded, according to the group’s analysis.
Eggs also topped the list of fastest-growing costs for seniors since 2000. Other categories in the top five include prescription drugs, heating oil, dental services and Medicare Part B premiums.
One caveat to a record high cost-of-living adjustment this year is the extra money — estimated to be more than $140 per month — may help prompt higher levels of spending among older Americans, according to research from Bank of America Institute.
While higher spending may complicate the fight against higher inflation, it is delayed relief for older Americans, whose cost-of-living adjustment was lower than price growth in 2022.
“The average retiree has found living with these high rates of inflation extremely difficult,” David Tinsley, senior economist at Bank of America Institute, previously told CNBC.com. More

These days, parents are paying nearly half of college costs.
Although parents are shouldering most of the responsibility, there are ways students can chip in and help their parents avoid taking on too much debt, higher education experts say.
There is plenty of merit-based aid available and free scholarship matching services to help students.

Kevin Dodge | The Image Bank | Getty Images

College is one of the biggest purchases you’ll make in a lifetime, yet few families have a solid plan for how to pay for it.
Most often, parents are on the hook for the bill, according to Sallie Mae’s annual How America Pays for College report. For the 2021-22 school year, parents covered 43% of the cost of college with their income and savings, while students picked up about 11%. But students can contribute in other ways too, experts say.

“Given the cost of college, parents paying for their children’s college education is the norm these days, not the exception,” said Kalman Chany, a financial aid consultant and author of The Princeton Review’s “Paying for College.” 
“Nevertheless, students and their parents need to plan ahead and be savvy about the financial aid process.” 
More from Personal Finance:4 strategies to avoid taking on too much student debtThese moves can help you save big on college costsHow to understand your financial aid offer

Who pays for college and how

Most students and their parents rely on a combination of resources, Sallie Mae’s data shows.
As of the latest tally, families spent $25,313, on average, on college expenses in the 2021-22 academic year, primarily by tapping into their income and savings. More than 7 in 10 families also used scholarships and grants — money that does not have to be repaid — to help cover the costs, and roughly 4 in 10 families borrow, or take out loans, the education lender found.

Arrows pointing outwards

As the cost of a degree continues to rise, price has become a bigger consideration.
College-bound students and their parents now say affordability and dealing with the debt burden that often goes hand in hand with a college diploma is their top concern, even over getting into their first-choice school, according to The Princeton Review’s 2023 College Hopes & Worries survey.

Maximize ‘other people’s money’

It is always better to use “other people’s money,” Chany said, referring to financial aid, to minimize out-of-pocket costs and avoid taking on too much student debt.  
Even now, there is still plenty of merit-based aid available and free scholarship matching services to help students find it.
It’s also not too late for families struggling to afford college next year to apply for financial assistance or ask the college financial aid office for more money.

Set financial expectations early

“When it comes to who is responsible for paying for college, it really is a family decision,” said Sallie Mae spokesman Rick Castellano. “Have the talk early.” 
It’s important to set clear expectations for how your child might contribute and consider the options, such as scholarships, grants, loans and work-study programs, he advised.
“Setting expectations and involving students in the college planning process ensures everyone enters this major decision with eyes wide open,” Castellano said.

Find ways for students to defray costs

Ultimately, the ability for students to pay and how to share the cost is unique to each family’s financial situation, added Ross Gittell, an economist and president of Bryant University in Smithfield, Rhode Island.
But even if students aren’t on the hook for the tuition bill, they can contribute in other ways, he added.
In fact, many undergraduates work while they are enrolled in college. As of 2020, 74% of part-time students and 40% of full-time students were employed, according to the National Center for Education Statistics. More

As the president of the National Bureau of Economic Research and a member on the Business Cycle Dating Committee, James Poterba helps determine when a recession officially starts and ends.
CNBC interviewed the MIT economist about the practice of dating downturns, and discussed why the work matters.

Ja’crispy | Istock | Getty Images

As the president of the National Bureau of Economic Research and a member on the Business Cycle Dating Committee, James Poterba helps determine when a recession officially starts and ends. Why is that important? What do those dates tell us?
When the NBER was founded in 1920, its economists mainly studied workers’ income, businesses and capital, said Poterba, who is also an economics professor at the Massachusetts Institute of Technology. However, noticing that things didn’t stay good or bad for too long — they were always changing — the bureau soon turned its attention to the cycles of the economy, as well.

Although there was less economic data available a century ago, “it was understood by anyone observing the economy that there were times when economic activity happened faster and more slowly, and when there was more or less going on,” Poterba said.
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The economists at the NBER wanted to know if these fluctuations were inevitable. And so they set out to understand why they occurred.
To ascertain the factors that precipitated a downturn, they’d have to find a precise way to pin when exactly the economy began to contract. Today, NBER’s Business Cycle Dating Committee, a private organization of academics based in Cambridge, Massachusetts, is considered an authority on the timeline of recessions.
With Federal Reserve economists predicting that the economy will enter a slump later this year, I spoke with Poterba about his research on recessions. While NBER doesn’t make any forecasts, he still had lots of interesting things to say about our downturn worries. (Our interview has been edited and condensed for clarity.)

Annie Nova: What is the main purpose of dating a recession’s start and finish?
James Poterba: So that, as we look back as students of economic fluctuation, we can try to understand what caused particular increases and decreases in the level of economic activity.
AN: How does this information help us as a society?
JP: It ultimately helps to design policy going forward. It enables us to look back and say, for example, what are the consequences of interest rate increases? What is the chance that an increase of interest rates is associated, sometime afterwards, with a period of declining economic activity? Or, if you see a large run-up in oil prices, does that typically lead to a recession?

AN: Some economists talk about recessions as inevitable in our current financial system. Why is that?
JP: That’s a very complicated question. If you go back in U.S. history to the agrarian economy days, I always think that’s an easy way to sort of understand some of this, though. If you had a very harsh winter, or if you had a drought, those are periods when the economy would experience a decline. And so today, when you have a shock like an increase in commodity prices, or a transportation disruption that impedes the ability to trade, those are all variables which can affect what happens in the economy.
AN: Do you have a sense of what language people used to describe downturns before the term “recession” took off?
JP: If you go back to the earliest work of the NBER, and now I’m literally talking 100 years ago, they used language like “business panics” or “crashes.”
AN: What factors does the committee use to determine that the U.S. is in a recession?
JP: A recession is a period of broadly dispersed decline in economic activity that lasts for a protracted period and is of substantial depth. So, it’s depth, diffusion and duration — the three Ds.

AN: Your committee’s recession timelines do not tell the full story of a downturn, right? Some people continue to face financial consequences for a long time after the economy begins to recover.
JP: One of the places where there’s been some demonstration of the long-lived impacts of recessions is with college graduates. Graduating with your undergraduate degree in the midst of a recession is less good from the standpoint of earnings than graduating in a very tight labor market. Even if you look a decade later, their earnings are still somewhat lower. Also, when workers are out of the labor market, when they’re not able to find jobs, that can lead to some decay of their skill set. And that has longer-lived effects too.
AN: Maybe because there is so much data available today, or maybe it’s the nature of the news cycle, but it feels like we’re always talking about a recession now. Even when we’re not in one, we can’t stop talking about the next one. Do you feel that?
JP: You’re right that there is a lot of media interest in the question of, is the economy likely to go into a downturn? Or, when the economy is doing poorly, is it likely to recover? Frankly, I think that’s kind of a shorthand for the conversation about, are things going to get better or worse? The words “recession” or “recovery” have become shorthand in those conversations. More

Overall, job prospects look good for the class of 2023.
The average starting salary for recent graduates is now nearly $56,000.
However, current college students expect to earn much more — almost $85,000 — in their first job, according to one report.

New college graduates negotiating their first salary may be in for a rude awakening.
In the midst of a historically strong job market, characterized by low unemployment, rising wages and a high degree of job-seeker confidence, those armed with a degree are feeling relatively good about their earning potential.

In fact, today’s undergraduates expect to make about $84,855 one year after graduation, according to a survey of college students by Real Estate Witch, part of real estate site Clever, in March.
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Yet, the average starting salary for recent graduates is just shy of $56,000, Real Estate Witch found, a difference of nearly $30,000.

College grads won’t take less than $72,000

Although the vast majority — or about 97% — of students would consider lowering their salary expectations, they wouldn’t work for less than $72,580, on average, at their first job, Real Estate Witch found.
The disconnect between perception and reality only worsens over time. A decade into their careers, students anticipate making more than $204,560. That’s well over the average midcareer salary of $98,647, according to Glassdoor.

Hiring outlook for the class of 2023

A City College of New York graduate takes a selfie during the commencement ceremony.
Mike Segar | Reuters

On the upside, employers plan to hire about 4% more new college graduates from this year’s class than they hired from the class of 2022, according to a report from the National Association of Colleges and Employers.
Although that’s down significantly from earlier projections, “the overall picture is still positive for the class of 2023,” said Kevin Grubb, associate vice provost of professional development and executive director of the career center at Villanova University.
“A lot of our students have a job heading into graduation,” Grubb said.
They just won’t necessarily be paid more than last year’s graduating class.

The average starting salary for this year’s crop of graduates is projected to level off, according to a separate survey by NACE. Typically high-paying disciplines, such as engineering, math or computer science, will pay nearly the same or lower than last year, NACE found.
As of April, businesses paid new workers 6.6% less than new hires last year, although the salary declines were more pronounced in finance, insurance and other professional services, according to data from payroll provider Gusto.
But for recent or soon-to-be grads entering the job market, getting experience is even more important than a good salary, said Luke Pardue, an economist at Gusto.
“If they can gain the skills, they can parlay that into a better job later on.”
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The federal minimum wage of $7.25 per hour was last updated in 2009.
A new proposal in Congress calls for raising the federal minimum wage to $17 per hour.
“In the year 2023 … nobody should be forced to work for starvation wages,” said Sen. Bernie Sanders.

Sen. Bernie Sanders speaks on raising the federal minimum wage outside the U.S. Capitol, May 4, 2023.
Anna Moneymaker | Getty Images News | Getty Images

The federal minimum wage of $7.25 per hour has not changed in nearly 14 years.
Last week, Sen. Bernie Sanders, unveiled a new plan to update the national pay rate, which he said is currently a “national disgrace.”

This time, prompted by high inflation, he is calling for $17 per hour, a $2 increase from the $15 per hour for which he and other Democrats had previously advocated.
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The change would help lift the incomes of nearly 35 million Americans who currently earn less than $17 per hour, Sanders said.
“In the year 2023, in the richest country in the history of the world, nobody should be forced to work for starvation wages,” Sanders said.

13 states have approved a $15 minimum wage

Today, 13 states have approved a $15 minimum wage, Sanders said. Many of those states are phasing wage hikes gradually. Some companies, such as Amazon, Target and Walmart, have also moved to set a higher minimum pay rate for their workers.

In Raleigh, North Carolina, where Rita Blalock, 57, works at a local McDonald’s, the state’s rate is still $7.25 per hour, in keeping with the federal minimum wage.
Blalock has been able to advocate for a higher wage for herself and currently earns $13 an hour. But living on even that income comes with its struggles, she said.
“We need more money,” said Blalock, who is a member of the Union of Southern Service Workers, which is pushing for a higher minimum wage.

“Anything is better than what we’re actually supposed to be getting,” she added.
In North Carolina, the living wage for a worker with no children is $16.83 per hour, according to the Massachusetts Institute of Technology’s living wage calculator. The poverty wage for that same worker is $6.53 an hour, 72 cents less than the hourly federal minimum wage, according to MIT.

Efforts to raise the federal minimum wage

“Nobody in this country can survive on $7.25 an hour,” Sanders said, while challenging his colleagues in Congress to try living on those wages for one month.
Sanders’ plan calls for raising the minimum wage to $17 per hour over a five-year period, or by 2028. In June, the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) will mark up the bill, he said.

Nobody should be forced to work for starvation wages.

Sen. Bernie Sanders
U.S. senator from Vermont

Democrats had pursued raising the federal minimum wage in recent years, though those efforts stalled.
In 2019, the House passed a bill to raise the minimum wage to $15 an hour.
In 2021, efforts to include the pay hike in a Covid-19 relief package were prevented due to Senate rules governing the budget reconciliation process. At that time, eight Democratic caucus members voted with Republicans against waiving the objection, which would have allowed the federal minimum wage increase to be included in the package.
A Congressional Budget Office report released that year found the plan to raise the minimum wage would prompt the loss of 1.4 million jobs, though it would lift 900,000 people out of poverty.

When President Joe Biden took office, he promised to address the federal minimum wage in his first 100 days, Blalock recalled.
“We’re way over 100 days,” she said.
Despite congressional gridlock, Biden was able to raise minimum pay for federal workers to $15 per hour through an executive order.

‘A weak minimum wage is bad for the overall economy’

Opponents to raising the minimum wage cite the higher costs those increases would put on businesses. A 2021 CNBC poll found one-third of small businesses anticipated laying off workers if a $15 minimum wage was implemented by Congress.
“We’re not increasing the cost of business,” Sanders said last week, noting that letting workers earn a living wage will help them spend more, which will help businesses.
Economic research backs up the idea, according to Heidi Shierholz, president of the Economic Policy Institute, who spoked at Sanders’ event.

Having a weak minimum wage is bad for the overall economy.

Heidi Shierholz
president of the Economic Policy Institute

Rising inequality means income has shifted away from low- and middle-income workers who are more likely to spend it, she said.
The decline of the real value of the minimum wage is now more than 40% below where it was at its peak 55 years ago, Shierholz said.
“Having a weak minimum wage is bad for the overall economy,” Shierholz added.
In addition to reducing inequality, raising the minimum wage would also reduce poverty, including child poverty, plus racial and gender wage gaps, she said.
However, recent research published by the National Bureau of Economic Research finds the poverty-reducing effects of raising the federal minimum wage may be limited. Under a plan to raise the national pay rate to $15 per hour, less than 10% of the workers who would be affected are part of poor families, the research found.
Not everyone is happy with proposed minimum wage increases. Efforts to raise minimum wage to $16 to $17 per hour in parts of New York have drawn criticism, including from farmers who say it will interfere with their ability to cope with high inflation, labor shortages, supply chain issues and other economic challenges.
However, economists such as Shierholz maintain a higher national pay rate must be mandated.
“If you allow employers who have power to suppress wages or to set their wages really low, they’ll exercise that power,” Shierholz said. “We see that.” More

CNBC spoke with Orna Guralnik, psychoanalyst on the Showtime series “Couples Therapy,” about the biggest money issues people face with their partners.
“Money is one of those touchstones with reality that can make it very clear that the two can’t agree or can’t find a way to problem-solve together,” Guralnik said.

Orna Guralnik
Source: Showtime

Not long after I began working as a personal finance reporter at CNBC in 2018, I started psychoanalysis. The form of therapy had long intrigued me, with the intensity of its three sessions a week and its search for answers among our dreams and pasts.
Because I’d heard that psychoanalysis was ridiculously expensive, however, I figured my main exposure to it would be in New Yorker cartoons. Then a friend from graduate school told me about The William Alanson White Institute on the Upper West Side of Manhattan, where analysts in training saw patients for as little as $15 a session. Thinking back on it now, it was probably something similar to what had driven me to study journalism that landed me on the couch in my early 20s — an abiding feeling that the stories people tell leave a lot out.

Over the next few years, my sessions with my psychoanalyst helped me to be more understanding as I reported on the money issues people faced. I was realizing how wide the gap could be between what we know we should do with money and what we actually do. What else could explain why, even as I wrote stories about the risks of credit card debt, I often put too much on my own cards? Or why, even as I explained to readers the massive benefits of starting to save early, I found myself delaying doing so?
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These are the types of mysteries that psychoanalyst Orna Guralnik tries to solve for her patients. When I first saw Guralnik’s documentary series “Couples Therapy” on Showtime, in which she provides therapy to real patients in a room with hidden cameras, I couldn’t look away. Despite how confounding or even hopeless the situation between the two people before her appeared, Guralnik was again and again able to draw connections and make observations that made them rethink the stories they were telling about themselves and each other.
As a personal finance reporter, I can make the answers sound easy. Take these steps to get out of debt. Do these things to stop overspending. What interests me most about the sessions with Guralnik is how she stays away from advice. Instead, she asks questions that take her deeper and deeper into the lives of the people on her couch.
I wanted to ask her about relationships and money, and got the chance to do so at the end of April, just when the new episodes of Season three of “Couples Therapy” premiered. (Our interview has been edited and condensed for clarity.)

‘Money is a very important point of contact with reality’

Annie Nova: How hard is it for people to talk about money?
Orna Guralnik: Very hard. It takes a long time in treatment to get into it. Sometimes, I find people are more private about money than their sex life.
AN: Why do you think that is?
OG: In American society, money locates you in the social structure more than anything else. It really puts you in your place. If you want to go deeper, a lot hangs on money in terms of people’s self-worth. Who are they in comparison to the people around them? You could give it Oedipal meanings. Did they manage to surpass their parents, or not?
AN: What do people risk by avoiding talking about money with you?
OG: Money is a very important point of contact with reality. People can have all sorts of fantasies and ideas about themselves. But money is feedback from the real world. So, when we don’t talk about money, we’re shielding ourselves from knowing reality.
AN: And what’s the danger there?
OG: It’s risky business. You can’t take care of yourself if you don’t deal with reality. We learn from reality. We grow from reality. If we defend against it, if we’re so fragile and anxious that we don’t want reality, we get stuck. And ultimately, we kind of crumble inward. Reality is good.
AN: Any advice for people who tend to avoid their financial realities?
OG: I’m a psychoanalyst. Our advice is always, ‘Open up inward. Be honest with yourself.’ Pain is OK. You can withstand the pain. Ignoring the problem or defending against it is ultimately more painful than the truth.

For couples, often, ‘the breakup is not about money’

AN: What are the biggest differences around money for couples?
OG: People know how to be different about so many things. Some people are frugal and can lean towards the obsessive side. Some people do not have any impulse control, and they hate thinking about the future. So, any conversation about budgeting or planning is excruciating.

AN: My father would often joke, ‘When money doesn’t come through the door, love goes out the window.’ Do you see couples break up over financial issues?
OG: From my perspective, the breakup is not about money. The breakup is about not being able to negotiate differences. Money is one of those touchstones with reality that can make it very clear that the two can’t agree or can’t find a way to problem-solve together.
AN: At one point in the new batch of episodes, one couple — Kristi and Brock — say they’re concerned that a big reason they’re moving in together is to save money. Presumably, they’ll be splitting rent and expenses. It seems like money can be just another way couples help each other, but the subject seems to get fraught so quickly. What do you make of their fear?
OG: Kristi and Brock are idealists, and I love them for that. For them, doing something for financial reasons compromises their idealistic spirit. They believe they should be moving in for love, not financial easement. But the idea that marriage is a response to love is a pretty modern idea. Marriage has always been, first of all, a way to create a structure that protects people. It is there to protect the financial unit. So, I’m cool with the fact that finances are a part of the reason people are together.

‘People may overspend as a kind of protest’

AN: When people talk about their financial issues, how do you respond to them differently as a psychoanalyst than you would if you were another type of therapist?
OG: It’s a great question. As a psychoanalyst, my general way of approaching things is with the belief that concrete realities are tied to unconscious realities. And so we’re always looking for what else is informing a concrete symptom. For example, I had a patient who hoarded money. And we discovered through analysis that, for her, money stood for time. By hoarding money, in her unconscious mind, she was protecting herself against death.
AN: On the other end of hoarding, a lot of people overspend.
OG: Sure. People may overspend as a kind of protest. “Why should I be limited? I’ve suffered so much in my childhood; I deserve reparations.” People also overspend because they live in fantasy. By creating a kind of movie life, they’re trying to protect themselves from the pain of reality.
AN: When someone becomes aware of what they’re doing with money, how do they translate that awareness into change?
OG: It becomes harder to lie to oneself. You can’t unsee those kinds of things, and people then do change their relationship to money. That’s one of the things that often happens to people in analysis: They get a lot more real about money. More

More students are dropping out of college.
Between the high cost of higher education and the strong labor market, some college students are choosing to join the workforce instead.
If the Supreme Court lets student loan forgiveness stand, it may bring back students who started college but never finished, a new report finds.

Halfpoint | Istock | Getty Images

As of the latest tally, 1.4 million more Americans have dropped out of college — although some “stopouts” may reenroll if the Supreme Court affirms President Joe Biden’s student loan forgiveness plan and their education debt is forgiven, a new report shows.
Overall, college enrollment declines have begun to level off, but the number of people who started college and then withdrew rose 3.6% in the 2020-21 academic year, according to the National Student Clearinghouse Research Center. More than 40 million people are currently unenrolled.

More from Personal Finance:Best colleges for financial aidHow new grads can better their odds of landing a jobThis strategy could shave thousands off the cost of college
An additional 41% of current college students said they have considered “stopping out,” or putting their education on hold, over the past six months, a new study from Lumina Foundation and Gallup found.
“The number of currently enrolled students thinking about stopping out keeps getting higher — that’s super concerning,” said Courtney Brown, Lumina’s vice president of impact and planning.

Financial obstacles lead many to stop out

Between the high cost of higher education and the strong labor market, students are questioning whether going to college is still worth it, noted Ross Gittell, an economist and president of Bryant University in Smithfield, Rhode Island.
“There’s concern about that investment upfront when the returns are uncertain,” he said.

Among recent “stopouts,” most said they put their education on hold due to financial obstacles, including the costs of programs, inflation and the need to work, the report by Lumina and Gallup found.
“It’s not just about tuition,” Brown said. “The reality is that today’s students work, they may have children or parents to support — there’s an opportunity cost.”

Struggles for those with student debt, no degree

At the very least, the Supreme Court’s pending decision on Biden’s student loan forgiveness plan will shed more light on the financial burden of college.
Increasingly, borrowers are struggling under the weight of ballooning student debt balances. Today, borrowers owe a combined $1.7 trillion.
For those who start college but never finish, managing such a hefty amount of debt is especially difficult. “It becomes problematic when the student doesn’t graduate or graduate in a timely manner,” Gittell said.

Forgiveness could prompt reenrollment

On the flip side, loan forgiveness would reduce that burden, making it more likely that previously enrolled students would reenroll, according to Brown.
“Loan forgiveness could be a key strategy to bring students who have some college, but no degree, back to finish their coursework,” she said.
Nearly half, or 47%, of students who stopped their postsecondary education before finishing said they would be very likely to reenroll if some or all their student loans were forgiven, the report by Lumina and Gallup also found.

Arrows pointing outwards

Meanwhile, college is only getting more expensive. Tuition and fees plus room and board, books and other expenses for a four-year private college averaged $57,570 in the 2022-23 academic year; at four-year, in-state public colleges, it was more than $27,940, according to the College Board, which tracks trends in college pricing and student aid.
Next year, some colleges said they will hike tuition even more, citing inflation and other pressures.
Still, many students and would-be students believe that getting a degree is worth it and continue to borrow to make college possible.
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Exactly when to retire is typically a personal decision.
But Social Security reforms could affect how well people live based on that timing.

Protestors take part in a May Day demonstration on Rennes, France, on May 1, 2023.
Damien Meyer | Afp | Getty Images

An increase in pension retirement age to 64 from 62 in France has sparked ongoing protests.
The U.S. could be poised for a similar change with the Social Security retirement age.

That shift would be unlikely to draw the same outcry seen in France. But some experts say younger generations should take to the streets — or at the very least take an active role in the discussions over how the program may be reformed.
“No one is talking about changing the [current] retirement age or doing anything that’s going to affect current retirees” or near-retirees ages 55 and up, said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.
“This is going to affect younger people, working-age people,” he said.

Program changes may ‘haunt’ younger workers

Social Security will face a critical inflection point in the next decade.
The program has been structured so that workers’ contributions through payroll taxes largely fund the benefit income for current beneficiaries. But with 10,000 baby boomers turning 65 every day — which is expected to go up to 12,000 per day in 2024 — the program is facing a shortage in funding.

The latest projections from the Social Security board of trustees find the program’s combined fund will be depleted in 2034 — one year earlier than was projected in 2022. At that point, just 80% of benefits will be payable.

The country has been here before. In 1983, changes were enacted to extend the program’s solvency including taxes on benefits and gradually increasing the retirement age from 65 to 67.
Today, that higher retirement age is still getting phased in. People born in 1960 and later now must wait until 67 to receive their full “retirement age” benefits.
But as lawmakers swear off changes that would affect near- and current retirees, that largely leaves younger generations to pick up the tab on any coming changes to the program.
“All this stuff is coming back to haunt young people,” said Laurence Kotlikoff, a Boston University economics professor and Social Security expert.

This is generational expropriation.

Laurence Kotlikoff
Boston University economics professor

How raising the retirement age could affect workers

Today, Social Security claimants take reduced retirement benefits if they start at 62 or 100% of the benefits they’ve earned if they claim at full retirement age, which is transitioning to 67. But if they wait until age 70, they get 8% more per year.
For example, if you are eligible for a $1,000 monthly benefit at full retirement age, you would get just $700 per month if you started at age 62. Alternatively, if you wait until age 70, you would get about $1,240 per month, Jason Fichtner, a former Social Security Administration executive and chief economist at the Bipartisan Policy Center noted during the panel.
Raising the retirement age would reduce benefits even further at age 62, for those earliest claimants who may not be able to afford to wait.
Consequently, it would be necessary to consider how such a change would affect high-income versus low-income claimants, Fichtner said.

‘There is no free lunch here’

Hero Images | Istock | Getty Images

Other changes could be on the table that broadly include increased taxes, benefit cuts or a combination of both. That could include raising the payroll tax rate — which is currently 12.4% evenly shared by workers and employers — or lifting the maximum wage income subject to those taxes, which is $160,200 in 2023.
If politicians cannot find either benefit cuts or tax increases palatable, they could turn to general revenue transfers, Fichtner noted.
That would amount to another $200 billion to $300 billion per year on top of the current $31.4 trillion national debt, he said.
“That means you’re piling on debt to the next generation,” Fichtner said.

“There is no free lunch here,” he said.
Other creative solutions could be implemented, such as a carbon tax or a financial transaction tax on stock sales, he suggested.
Social Security will likely still be around for younger generations. However, depending on what changes are made, younger cohorts may bear the financial brunt, Haltzel noted.
“As we’ve seen in the past, politicians like to inflict pain not on the folks who are retiring now but who are coming down the pipeline, and so you’re going to be firmly in the cross hairs,” Haltzel said to the Gen Z audience members.
“Please get involved and stay engaged,” she said. More