The latest on future of Social Security

Jun 10th, 2019 | By | Category: News

Social Security’s trust funds appear to be holding steady or gaining years in their long-term financial status, although the program isn’t expected to completely cover benefit payouts in the years ahead.

The Social Security Board of Trustees, in its annual report in April, said the combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) trust funds are expected to be depleted in 2035, one year later than was projected last year, with 80 percent of benefits payable at that time.

The OASI fund is projected to be exhausted in 2034, the same estimate as a year ago, with 77 percent of benefits payable at that time. And the DI fund is likely to be depleted in 2052, 20 years longer than last year’s estimate of 2032, with 91 percent of benefits still payable.

In their forecast of Social Security’s future, the trustees further announced that the reserves of the combined OASI and DI trust funds increased by $3 billion in 2018 to a total of $2.8 trillion. In 2020, for the first time since 1982, the total annual cost of the program is projected to exceed total annual income, causing reserves to decline next year. Social Security’s cost has exceeded its non-interest income since 2010.

The year when the combined trust fund reserves are projected to become depleted, if Congress doesn’t act before then, is 2035. At that time, there would be sufficient income to pay 80 percent of scheduled benefits.

“The trustees recommend that lawmakers address the projected shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them,” said Nancy Berryhill, who is one of the trustees in her role as acting commissioner of Social Security.

Berryhill said the change in the reserve depletion date for the disability insurance fund is due to disability applications declining since 2010, “and the number of disabled-worker beneficiaries receiving payments has been falling since 2014.”

The Trump administration has proposed spending less money on Social Security over the next 10 years. Proposals facing Congress in an effort to strengthen Social Security include a higher payroll tax, raising the minimum retirement age, and changing formulas for determining benefits.

According to AARP, running out of cash reserves by 2034 wouldn’t leave Social Security bankrupt and unable to pay benefits. The older-adults advocacy organization says that even if Congress does nothing to shore up the system by 2034, Social Security will be able to pay out 79 percent of promised benefits until 2090.

AARP noted the last time Social Security nearly depleted its reserves was in the early 1980s, when Congress increased the full retirement age from 65 to 67 and started to tax benefits based on income levels.

Lawmakers routinely pledge to keep Social Security solvent.

“It is a promise that if you work hard, you will have some security when you retire or if you become disabled,” said U.S. Sen. Patty Murray of Washington. “It is a safety net to keep seniors out of financial poverty. Social Security must remain available not only for current beneficiaries but for generations to come.”