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Social Security benefits are at risk for a “crisis” of cuts in the next decade.
Here’s what lawmakers say now about addressing the program’s funding woes.

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WASHINGTON — Millions of Americans look forward to claiming Social Security retirement benefits after years of paying into the program.
But Social Security beneficiaries face the possibility of an across-the board benefit cut of at least 20% in the next decade, due to a looming funding shortfall the program faces.

That can be changed if Congress decides to act before the projected 2034 depletion date for the program’s combined funds.
“You cut that 20%, that’s a crisis,” said Tony Vola, 76, a Social Security beneficiary and member of the AARP Iowa Executive Council. Vola spoke on Thursday during a Social Security forum in Washington, D.C., held by AARP, a nonprofit group representing people ages 50 and up.
“We’ve done our part; it’s time for Congress to do their part,” Vola said.
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Social Security faces a shortfall between the income it receives through payroll taxes and the benefits it pays through monthly checks. The program’s trust funds help make up the difference.

But in the next decade those trust funds will dry up, projections show. Without that buffer, benefits would be immediately reduced.

Reform is unlikely before the presidential election

The headlines about the program’s funding woes may prompt Americans to suspect Congress is doing nothing to change the program’s situation.
Two top lawmakers who are working on Social Security reform proposals who spoke at AARP’s forum — Republican Sen. Bill Cassidy of Louisiana and Democratic Rep. John Larson of Connecticut — attributed the lack of action in part to stumbling blocks their proposals have met.
“It will not happen before the next presidential election, because President Biden has made it clear that he’s not going to act,” said Cassidy, who spoke first at the forum.

Republican Sen. Bill Cassidy of Louisiana speaks to the press on Capitol Hill on Feb. 10, 2021.
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During his State of the Union address in February, Biden called for unanimity from both sides of the aisle to protect Social Security and Medicare.
But while Biden called out a proposal from Florida Republican Sen. Rick Scott that would sunset the program every five years, the president failed to mention a separate bipartisan plan he had been briefed on, said Cassidy, one of the lawmakers involved in that effort.
The White House did not immediately respond to a request for comment.
Meanwhile, Larson has put forward a bill, Social Security 2100, in four sessions of Congress to make benefits more generous. That enhancement would be paid for by increasing Social Security payroll taxes, as well as adding an additional net investment income tax, for taxpayers earning over $400,000.
The bill has had broad support among House Democrats, with 208 co-sponsors for a previous version of the proposal. Yet is has yet to make it to the House floor for a vote.
Recent hopes to advance the bill failed after Democrats worried Republicans would say they’re behind a massive tax increase, Larson said Thursday.
“People got nervous,” Larson said. “The bill was scheduled for a vote in the Ways and Means Committee and got pulled, much to my chagrin.”

How Social Security reform proposals would work

The two lawmakers’ proposals take different approaches to achieving long-term solvency to the program.
Cassidy wants to create a new Social Security fund by raising $1.5 trillion that would be invested in the stock market. This would be separate from Social Security’s existing trust funds, which are held in either cash or Treasury bonds.
The new fund would help the program keep up with inflation, which may run at 6% or 7% annually, while Treasury notes typically earn returns of just 1% to 4%, Cassidy said.
“All we’re doing is what every other 401(k), every other national pension plan does,” Cassidy said. “We invest in the strength of the economy as opposed to Treasuries, which are losing value every day.”
As the fund grows, it would ultimately address 70% of Social Security’s shortfall, Cassidy said. The remaining 30% would have to be resolved through bipartisan compromise.
Any changes to Social Security would require 60 votes in the Senate, and therefore would have to have agreement on from both parties.
Ultimately, that kind of compromise cannot happen without leadership from the top, according to Cassidy.
“We need a president to come up with the final language,” Cassidy said.

Rep. John Larson, D-Conn., speaks during an event to introduce legislation called the Social Security 2100 Act. which would increase increase benefits and strengthen the fund, on Capitol Hill on Jan. 30, 2019.
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Larson, who recently reintroduced his Social Security 2100 proposal, criticized one idea that has been floated to create study commissions to evaluate the program’s issues.
“There’s only two ways to go with this, you are either going to cut benefits or increase revenues,” Larson said. “You don’t need to study that.”
Larson’s bill would bring the minimum benefit up, which would lift 5 million people out of poverty, he said.
In addition, it would increase all benefits by 2% across the board, while also making benefits more generous for others including long-term beneficiaries, widows and widowers, and dependent children who are students.
The changes would be the first enhancements to Social Security in 52 years, according to Larson, who said he expects the next Democratic House speaker will make the proposal a priority.
In the meantime, it’s up to voters to put pressure on Congress to act, Larson said.
“Everybody wants to say how much they love Social Security,” Larson said. “You do? Where’s your bill? Where’s your proposal?”
Without action on Capitol Hill, Social Security beneficiaries are left wondering what could happen if benefits eventually do face a shortfall.
“If you take any cut away from any of us who are currently on Social Security, it will have a major effect on us, not just us, but our families,” said Alfred E. Mason, 83, who is the Louisiana state volunteer president at AARP. Mason began paying into the program in 1958 with his first job. More

“The best time to book is between Thursday and the second week of October, as prices are low and there are a lot of seats left to book,” said Hayley Berg, lead economist at Hopper.
Ticket prices are likely to rise after mid October and spike significantly each day in the last three weeks ahead of each holiday.
Weather and air traffic disruptions caused a lot of turmoil for holiday travelers last year.

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‘Prices will start to rise after about Oct.14th’

Travelers are seeing cheaper flights this year. Domestic round-trip fares over Thanksgiving are averaging $268 per ticket, down 14% compared to last year. For Christmas, prices are about $400 round-trip, down 12% from last year, per Hopper data.
Ticket prices will go up as more travelers book their trips and flights come closer to selling out. While there may be some deals available through the end of October, don’t wait it out if you have set travel dates in mind between school or work.
“Prices will start to rise after about Oct. 14th for both Thanksgiving and Christmas trips,” Berg said. “Plan to book as soon as possible, as prices will rise each day as the holidays approach.”

Flight prices are likely to spike significantly each day in the last three weeks ahead of each holiday, Hopper anticipates.

Secure your flight and confirm your seating

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Weather and air traffic disruptions caused a lot of turmoil for holiday travelers last year. Given the demand for holiday flights, it’s worth planning with the potential for such delays or cancellations in mind.
Fares will likely become increasingly competitive as travelers wait, “judging by the number of people traveling this year,” said Elizabeth Ayoola, a personal finance writer at NerdWallet. 
“Those determined to avoid the summer crowds and heat may be planning to travel during the holidays, driving prices up,” said Ayoola.
Holiday travel numbers are expected to resemble or surpass results from 2019, wrote Phil Dengler, co-founder and head of editorial and marketing of travel site The Vacationer.
Take one of the first flights of the day if possible. You’re two times more likely to be affected by flight delays or cancellations after 8:00 a.m., Berg said.
While nonstop flights are often more expensive, they can help travelers bypass the risk of missing connections due to a flight disruption.
Travelers might also look into travel insurance, and brushing up on your rights if your travel plans are interrupted.
Moreover, if you are not flexible on the specific flight you need to take, “ensure you have a seat on your desired flight,” Berg added.
While picking your seat can come at an additional cost with most airlines, it may serve as a peace of mind for travelers. More

If you’re making $80,000 per year, the thought of racking up $1 million for retirement might seem daunting. But with a little dedication and the right timing, it’s likely within reach — if you stick to a clear plan.
As a rule of thumb, most financial advisors suggest that you save 10% to 15% of your salary for retirement. But if your goal is to get to $1 million, the percentage you need to invest will vary drastically depending on how old you are when you start investing.

CNBC crunched the numbers, and we can tell you how much of your income you’ll want to tuck away if you make $80,000 per year. 
These numbers assume that you plan to retire at age 65 and have no money in savings now.
Financial advisors typically recommend the mix of investments in your portfolio shift gradually to become more conservative as you approach retirement. For investing, we assume an average annual 6% return. We don’t take into account inflation, taxes, pay increases or other savings-affecting factors life may throw your way, so make sure you plan accordingly. 
Watch the video above to learn how much you should be saving to reach your goal. More

The Consumer Financial Protection Bureau outlined its proposed rules to remove medical bills from credit reports.
The CFPB found that 58% of all third-party debt collection on consumer credit reports was for medical bills.
Credit reporting companies such as Equifax, TransUnion and Experian already limit some medical debt collection on credit reports.

The Consumer Financial Protection Bureau headquarters in Washington, D.C., on May 14, 2021.
Andrew Kelly | Reuters

The Biden administration wants to remove medical debt completely from consumer credit reports, so the Consumer Financial Protection Bureau on Thursday outlined its proposed rules to keep unpaid medical bills from affecting patient’s credit scores.
One in 5 Americans have medical debt on their credit reports, according to the CFPB. Medical debt can lead to a debt spiral for some consumers and narrow their options for housing, loans and credit cards.

“We know credit scores determine whether a person can have economic health and wealth,” said Vice President Kamala Harris. “Credit scores determine whether a person can buy a home, whether they can buy a car, rent an apartment, or own a small business.”

Medical debt is the most common debt in collection. The CFPB found that 58% of all third-party debt collection on consumer credit reports was for medical bills. The complexity of medical billing also makes it prone to errors. One study from the Medical Billing Advocates of America estimates up to 80% of medical bills have mistakes. 
“These bills, even ones where the patient doesn’t owe anything further, can end up being reported on the patient’s credit report,” said Rohit Chopra, director of the CFPB, “and millions of people have spent millions of hours disputing these errors, often while dealing with serious illness.”
The CFPB outlined proposals to prohibit consumer reporting companies such as Equifax, TransUnion and Experian from including medical debts and collection information on consumer credit reports. As of July 2022, the companies no longer include medical debt in collection under $500 on credit reports. New rules would make that voluntary approach mandatory and extend to all medical debt.

The agency also wants to stop creditors from relying on medical bills for underwriting decisions, to ensure that only non-medical information is used when considering a borrowers’ loan application.

Vantage Score no longer uses medical debt or medical collection in its credit score calculation, and newer FICO score models put less weight on that information. 
“If credit bureaus are pulling off much of this information already because it isn’t a good predictor of risk, why should creditors see your medical bills at all?” said Chopra. “And if creditors don’t need to see your medical-billing history, why are we continuing to allow debt collectors to use credit reports to pressure people into paying questionable bills at all?”
The rulemaking process takes time; CFPB officials expect to issue a formal rule sometime next year.
“It is unfortunate that the CFPB and the White House are not considering the hosts of consequences that will result if medical providers are singled out in their billing compared to other professions or industries,” Scott Purcell, CEO of debt collection industry group ACA International, said in a statement.
Sen. Elizabeth Warren, D-Mass., a vocal supporter of the CFPB, praised the announcement Thursday.
“Vice President Harris is leading the fight to lower costs for hardworking Americans by addressing the burden of medical debt,” Warren said. “No one should have their credit ruined because of a medical emergency. By proposing to erase medical debt from credit reports, the CFPB is doing what the consumer agency does best: saving Americans money.”
— CNBC’s Chelsey Cox contributed to this story. More

Your Money

About half, 52%, of young women ages of 7 to 21 want to be homeowners by the time they’re 30 years old, a recent report found.
Despite current high rates and low inventory, this generation has time on their side, experts say.
Here are three key components to being able to buy your first home.

Girls and young women want to be homeowners by the time they’re 30 — a higher priority even than getting married or earning a lot of money.About half, 52%, of young women ages 7 to 21 want to buy a house by 30, the most of any goal, according to Girlguiding’s Girls’ Attitudes Survey 2023. To compare, 48% want to be married by age 30, and 39% said it’s a goal to earn a lot of money. The organization polled 2,614 girls and young women in the U.K. between the ages of 7 and 21 earlier this year.
The report echoes findings from U.S. teens, 85% of whom think owning a home is part of “the good life,” according to the 2022 Junior Achievement and Fannie Mae Youth Homeownership survey.

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While teens dream of owning a home years from now, it’s a daunting market right now. Houses are more expensive than they were pre-pandemic and mortgage rates are higher. The median U.S. home sale price rose 3% year over year to $420,846 in August, the largest annual increase since October 2022, according to real estate brokerage firm Redfin.
Experts say prices are not likely to come down any time soon as the Federal Reserve may continue its interest rate hikes later in the year and homebuyers face a low supply.
On the other hand, young adults looking ahead to homeownership have time on their side.
“Hopefully by the time they are ready to buy, we will be in a different rate environment, there will be more inventory and a more balanced real estate market,” said Melissa Cohn, regional vice president of William Raveis Mortgage in New York.

A daughter learns to save money with a piggy bank.
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Three key components to buy your first home

Middle and high school students can start gaining financial literacy early, said certified financial planner Kamila Elliott, co-founder and CEO of Collective Wealth Partners in Atlanta. It will set them up for success in the housing market when their turn comes around.

To that point, there are three key components to being able to buy your first home, said Cohn.
1. Down payment
The down payment for a home is the biggest hurdle for most homebuyers. Although the standard is 20%, you can get by with much less. Shoppers come up with just 6% or 7% as a down payment on their first home more often, Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, told CNBC.
If a high school student wants to buy a house in roughly 10 to 15 years, they can get started with a part-time job and set aside their money for that goal, Elliott explained.
A savings account is key for short-term goals, but if you have been putting aside money in retirement accounts, you may be able to use funds there for your down payment, too.
For instance, a Roth IRA is a retirement account with rules that benefit first-time homebuyers, said CFP Lazetta Rainey Braxton, co-founder and co-CEO of virtual firm 2050 Wealth Partners. Homebuyers can pull out of a Roth IRA account up to $10,000 for the down payment of their first home without penalty, said Braxton, who is a member of the CNBC Financial Advisor Council.
First-time homebuyers can also take advantage of down payment assistance programs some banks and states offer, Cohn said.
2. Credit score
When you apply for your mortgage, banks will look at your credit score, which is a measure of how well you manage debt. The score generally ranges between 300 and 850. The higher the score, the lower — and better — the interest rate you may qualify for on your loan.
For mortgages, banks like to see you are able to make consistent payments and are responsible with debt, said Cohn.
To maintain a high score, it’s important to manage the credit card responsibly and make on-time payments in full, said Elliott, who is also a member of the CNBC FA Council.
3. Income
Having a good income can also make you a more competitive buyer, added Cohn.
Lenders look at your debt-to-income ratio to figure out how much mortgage debt you can take on. Monthly payments for student loan debt, an auto loan or any other lines of credit can affect that calculation.
If you haven’t been working in a job for two years and your income is based on bonus or commissions, you may need a parent or family member to cosign the mortgage to show more stability in history of income, Cohn added.

Joybird ranked the best states for flipping houses based on the maximum return on investment and several other factors.
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‘Understand what it is to be a homeowner’

If homeownership is a goal for early adulthood, it’s important to anticipate your responsibilities as a new homeowner, experts say. Outside of the mortgage, property taxes and insurance costs, utility and maintenance costs also tend to be higher in a house than an apartment.
“Understand what it is to be a homeowner and how things work,” Elliott said.
Keep in mind that your first home might not check all your boxes. It should be in an area you like and meets your needs.
“Your first home will not be your ‘forever home,'” Elliott said. “It may not [have dream amenities like] an open-air kitchen, the fireplace or a pool in the backyard.” More

The Biden administration has made it clear that student loan borrowers’ payments will restart in October.
However, some people may have a little more time. Here’s why.

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By now, most federal student loan borrowers have accepted that, after a three-year break, their payments will restart in October. Some people, however, may actually have more time.
CNBC spoke to several borrowers who say they have statements from their servicer showing their first payment’s due date is in November or December.

That’s not surprising, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.
“Some borrowers may not be due until 2024,” Buchanan said.
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Your last payment may affect your next due date

Borrowers have different due dates, based on various factors about their loans. When a borrower made their last payment before or during the pause can impact when their next due date is, Buchanan said.
Many people made their usual student loan payment in March 2020, before former President Donald Trump first announced the pause on federal student loan bills and interest accrual, he said.

Depending on when their loan servicer received those funds, it may have been considered an extra payment that has now pushed back their due date. Meanwhile, borrowers who made repeated payments during the pause will likely have even more time, Buchanan said.
You can contact your loan servicer or log in to StudentAid.gov to learn your exact due date, said higher education expert Mark Kantrowitz.
Recent graduates, meanwhile, may also get more time if they’re still in their grace period, Kantrowitz said. Grace periods usually span six months from graduation.

How to get ready for your student loan payment

Ahead of your due date, you want to make sure you are familiar with your loan servicer (millions of borrowers’ accounts had been transferred to a new company during the pandemic) and the payment amount you’ll owe. The typical federal student loan bill is $350 a month.
If you were enrolled in the standard 10-year repayment plan before Covid and still are, your monthly payment should not have changed. However, borrowers repaying their loans in an income-driven plan could see a different monthly obligation if their income has increased or decreased since three years ago.
If you are struggling financially, you should acquaint yourself with your options, including deferments and forbearances.

Until October 2024, borrowers will be shielded from the worst consequences of missed payments, the Biden administration recently announced.
For example, loans will not go into default and delinquencies will not be reported to credit reporting agencies, Kantrowitz said.
Late fees won’t be charged, either.
But as is the case with a forbearance, interest will continue accruing on your debt while you don’t make payments. As a result, Kantrowitz recommends borrowers start repaying their bills if they can.
“Doing otherwise will eventually hurt them,” he said. More

Credit card interest rates, also known as APY, are at all-time highs.
The Federal Reserve has raised borrowing costs to their highest level in over two decades to tame pandemic-era inflation.
Making just the minimum monthly payment on a credit card is financially “brutal” for consumers, one expert said.

Credit cards are practically charging “loan shark interest rates” after hitting historic highs this year, said Barry Glassman, a certified financial planner and member of CNBC’s Advisor Council.
A credit card’s interest rate is the price consumers pay to borrow money. It’s most commonly expressed as a yearly rate — the annual percentage rate, or APR.  

The average interest rate for all credit card accounts hit 20.68% in May, the highest on record, according to most recent Federal Reserve data.

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Ted Rossman, industry analyst for CreditCards.com, doesn’t think rates have gotten nearly bad enough to be in “loan shark” territory. Some payday loans charge 400%, 500% or even more than 600%, for example, he said.
“But credit cards do charge the highest interest rates of any mainstream consumer debt [by far],” he wrote in an e-mail. “We’re talking 3x, 4x, 5x, maybe even higher compared with your typical mortgage, car loan or student loan. This is why it’s so important to prioritize credit card debt payoff.”

High rates ‘can have a real devastating snowball effect’

Consumer borrowing costs have increased sharply since early 2022 as the Federal Reserve began raising its benchmark interest rate to tame inflation.
Cardholders who pay their balances in full and on time don’t amass interest. But banks do charge interest when consumers carry a balance from month to month. Such accounts had a 22.16% average interest rate in May, also a record high, according to Fed data.

Since these are averages, many consumers are paying higher rates that can extend at least into the mid-20s, said Glassman, founder and president of Glassman Wealth Services, based in Vienna, Virginia, and North Bethesda, Maryland.
Rates of more than 20% “can have a real devastating snowball effect and consumers may never catch up,” Glassman said.
In fact, 37 out of 100 cards tracked by CreditCards.com currently cap their APRs at 29.99% or more — a record share.

Total credit card debt has surpassed $1 trillion

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Americans leaned more on credit cards to pay their bills as pandemic-era inflation raised prices on food, housing and other consumer items at the fastest pace in four decades.
Total credit card debt topped $1 trillion in the second quarter of 2023 for the first time ever.
There are 70 million more credit card accounts open now than in 2019, Federal Reserve Bank of New York economists wrote in August. Further, 69% of Americans had a credit card account in the second quarter, up from 65% at the end of 2019 and 59% at the end of 2013, they said.
“Credit cards are the most prevalent form of household debt and continue to become even more widespread,” the economists wrote.
The good news, for now, is that delinquency rates among cardholders seem to have stabilized around pre-pandemic levels, even in lower-income areas, according to the Fed economists.
“American consumers have so far withstood the economic difficulties of the pandemic and post-pandemic periods with resilience,” the economists said. “However, rising balances may present challenges for some borrowers.”
About half of cardholders carry debt from month to month, and therefore amass interest, Rossman said. Making just the minimum monthly card payment is financially “brutal,” he said.
Consider that the average credit card balance is $5,947, according to TransUnion. Making the minimum payment at current interest rates means a borrower will be in debt for 211 months and owe $8,811 in interest, Rossman said. (His analysis used a 20.71% interest rate cited by Bankrate as of Sept. 13.)

The Fed hasn’t broken much with high rates — yet

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The Fed’s sharp increase in its benchmark interest rate has pushed up borrowing costs across many types of debt like mortgages and consumer loans Glassman said.
“Whenever the Fed has raised interest rates as they have, something usually tips or fails,” he said.
Yet, aside from a few bank failures earlier this year — like those of Silicon Valley Bank and Signature Bank — the U.S. economy hasn’t seen “anything really break,” Glassman said.

“We have seen some bank failures and maybe that was it,” he added. “I’m not so convinced that that’s the only downside or devastating impact of much higher interest rates that we’ve seen.”
Aside from the financial challenge higher credit card balances pose for consumers, a resumption of federal student loan payments in October — after a pause of more than three years — will also stress households, Glassman said.
It will amount to “an immediate pay cut” for borrowers, he said. Borrowers owe a collective $1.7 trillion in student debt.
In the past, borrowers may have been able to take helpful steps like refinance their loans at a lower interest rate, but that safety valve isn’t available any longer, at least while interest rates remain at their highest level in 22 years, Glassman said.
“This dynamic over the next year-plus is going to be fascinating and I’m not exactly sure how it plays out,” he said. More

The Biden administration announced Wednesday that it would cancel nearly $37 million in student debt for more than 1,200 students who attended the University of Phoenix.
The University of Phoenix’s national ad campaigns misled students by making them believe their job prospects would be improved by the school’s partnerships with thousands of corporations, including Fortune 500 companies, the Education Department said.

A sign marks the location of the University of Phoenix Chicago Campus in Schaumburg, Illinois.
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The Biden administration announced Wednesday it would cancel nearly $37 million in student debt for more than 1,200 students who attended the University of Phoenix.
The relief will go to many borrowers who applied for borrower defense discharges between Sept. 21, 2012, and Dec. 31, 2014, according to the U.S. Department of Education. The borrower defense program allows borrowers who can prove they’ve been misled or defrauded by their schools to get their federal student loans voided.

The University of Phoenix’s national ad campaigns misled students by making them believe their job prospects would be improved by the school’s partnerships with thousands of corporations, including Fortune 500 companies, the Education Department said.
“The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll,” said Richard Cordray, the federal student aid chief operating officer.
“Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees,” he said.
The University of Phoenix did not immediately respond to a request for comment.
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The Federal Trade Commission also provided evidence from its multiyear investigation into the University of Phoenix that resulted in a $191 million settlement in 2019. The FTC had obtained internal emails, as well as advertisement materials and recorded phone calls with prospective Phoenix students.
“Phoenix management was aware that the corporate relationships the school claimed to have did not exist,” the Education Department said. “One senior vice president at Phoenix described one of the advertisements in question as ‘smoke & mirrors.'”
Impacted borrowers will be notified in early October of the relief, and should see any remaining loan balances canceled. Payments made on these loans will be refunded.

The borrowing rates at the University of Phoenix are among the highest in the country. Its students took out nearly $484 million in loans in the 2022-2023 academic year, according to higher education expert Mark Kantrowitz.
So far, the Biden administration has canceled more than $117 billion in student debt for 3.4 million borrowers, through fixes to certain repayment plans and the Public Service Loan Forgiveness program.
President Joe Biden’s plan to forgive up to $20,000 in student debt for tens of millions of Americans was blocked by the Supreme Court in June. Biden said he was pursuing another path to cancel people’s education debt, though experts say the next rendition is likely to have a narrower reach. More