This lack of income could lead to reduced consumption and an inability to pay bills.
Low interest rates also negatively impact Social Security’s broader finances because Social Security Trust Funds earn interest on their US Treasury bond holdings.
Assuming there are no tax increases, the difference will have to be made up through borrowing or reductions in other federal spending.
Social Security faces severe, urgent financial challenges that policymakers must address immediately to ensure the program remains viable for future generations.
Companies that sell annuities in the private sector generally adjust their payouts and make them less generous when life spans increase or when interest rates decrease.
However, Social Security doesn’t adjust monthly benefits this way—its age adjustments are fixed by law.
Ignoring or delaying a response to fiscal challenges will only increase the magnitude of changes required, regardless of whether we maintain low, medium, or high interest rates.
Our editors will review what you’ve submitted and determine whether to revise the article.
I’ve spoken on Social Security and retirement security issues at various events in recent years.
At times, I’m asked what low interest rates mean for the financial security of today’s retirees, to which I reply with a joke: “Why does the Federal Reserve hate old people?