Social Security's savings pot to empty in 2032, Apollo economist says

What happened

Apollo Chief Economist Torsten Slok says the U.S. Social Security retirement trust fund is projected to run out of reserves in late 2032, which could mean benefit cuts unless Congress acts. Costs now exceed income, forcing the program to draw down reserves.

Confirmed

Global impact / market context

Social Security pays retirement benefits to many Americans, so using up its savings would leave only enough tax revenue for about 78% of scheduled benefits. That means an expected cut of roughly 22%, reducing household income and spending.

Analyst inference

Benefit cuts would hit consumer spending, which drives company revenue, especially for businesses serving older households. Investors holding bonds and stocks may reassess how reduced retirement income affects demand, while payroll tax changes would raise employer costs.

Analyst inference

What to watch

1. Congress could raise revenue by increasing the 12.4% payroll tax rate on wages, which is split between workers and employers, or by lifting the annual wage cap that limits taxed earnings. Confirmed
2. Lawmakers could reduce benefits by raising the retirement age or slowing cost-of-living adjustments, which are yearly increases meant to keep payments in line with rising prices. Proposed
3. Combining the retirement and disability trust funds would push depletion to 2034 and allow about 83% of benefits, but that requires legislation, so watch for any bill proposing it. Analyst inference

Evidence

• seekingalpha.com