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Congress has just over a decade to fix Social Security before cash runs out
Social Security is expected to run short on funds by 2035, according to a new report.
Social Security relies on its trust funds to provide monthly benefit checks to around 70 million Americans.
But an aging population is pushing up the cost of the program as a smaller share of people are paying into it, and spending is outpacing income.
The latest annual report from the Social Security Board of Trustees found that the program will only be able to pay out full benefits for the next 11 years - which is one year later than previous estimates.
While Martin O'Malley, Commissioner of Social Security, said this was 'good news' for beneficiaries, he urged Congress to take steps to 'extend the financial health of the Trust Fund into the foreseeable future.'
Martin O'Malley, Commissioner of Social Security, urged Congress to take steps to 'extend the financial health of the Trust Fund into the foreseeable future'
Social Security relies on its trust funds to provide monthly benefit checks to around 70 million Americans
Social Security is financed mainly through payroll taxes that are taken out of paychecks - which are then used to pay retirement and disability benefits.
If the trust funds which the Social Security Administration relies on are depleted, it does not mean that payments will suddenly disappear.
Instead, the Trustees forecast that beneficiaries will face a cut to their monthly checks - losing 17 percent of their current benefits.
This could be significant for millions of disabled Americans, and those who rely on Social Security as their sole income in retirement.
However it is a slight improvement on last year's estimates, which forecast that funds could be depleted by 2034 - at which point only 80 percent of scheduled benefits would be able to be covered.
'This year's report is a measure of good news for the millions of Americans who depend on Social Security, including the roughly 50 percent of seniors for whom Social Security is the difference between poverty and living in dignity - any potential benefit reduction event has been pushed off from 2034 to 2035,' Social Security Commissioner O'Malley said in a statement.
He put the improved outlook on last year down to more people contributing to Social Security due to 'strong economic policies that have yielded impressive wage growth, historic job creation, and a steady, low unemployment rate.'
The uncertain path of Social Security has been a concern for many - in particular those who are close to retirement age.
In what has been dubbed the 'silver tsunami,' around 4.1 million Americans are due to turn 65 in 2024, and every year through 2027, according to a report from the Alliance for Lifetime Income.
Earlier this year, billionaire CEO Larry Fink said Americans should work beyond the age of 65 to stop the Social Security system collapsing.
O'Malley urged Congress to take action to shore up the program into the future on a bipartisan basis.
'Eliminating the shortfall will bring peace of mind to Social Security's 70 million-plus beneficiaries, the 180 million workers and their families who contribute to Social Security, and the entire nation,' he added.
Jo Ann Jenkins, CEO of dedicated over-50 organization AARP, said in a statement: 'Congress owes it to the American people to reach a bipartisan solution, ensuring people's hard-earned Social Security benefits will be there in full for the decades ahead.
'The stakes are simply too high to do nothing.'
The financial outlook of the Social Security system has long been a point of political contention.
Republicans have suggested the retirement age be raised, while Democrats have offered increasing the cap on payroll taxes as a potential solution.
Some experts are warning that politicians are running away from the problem rather than trying to fix it - and it is crucial that they act now.
In what has been dubbed the 'silver tsunami,' around 4.1 million Americans are due to turn 65 in 2024, and every year through 2027
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement: 'We're driving straight into this mess despite all the warning bells and alarms that the Trustees and others have been ringing for decades now.
'Every year we get closer to the deadline, we seem to get further away from the solutions.'
Meanwhile the report also updated forecasts for when Medicare funds will become depleted.
Medicare, which provides health insurance for people aged 65 and older, will see its reserves become depleted by 2036 - five years later than was projected last year.
This is due in part, the report said, to higher payroll tax income and lower-than-projected 2023 expenditures.
President Joe Biden said in a statement Monday: 'Since I took office, my economic plan and strong recovery from the pandemic have helped extend Medicare solvency by a decade, with today's report showing a full five years of additional solvency.
'I am committed to extending Social Security solvency by asking the highest-income Americans to pay their fair share without cutting benefits or privatizing Social Security.'