Social Security and Medicare remain in dire straits, with the Social Security trust fund projected to be depleted in 17 years, by 2034, according to the just-released trustees’ reports to Congress.
The trustees’ report notes that the Disability Insurance (DI) program is in even more trouble, with DI Trust Fund asset reserves projected to become depleted in 2028, at which time continuing income to the DI Trust Fund would be sufficient to pay 93% of DI scheduled benefits.
“Legislative action is needed to address the DI program’s financial imbalance,” the report states.
When the Old-Age, Survivors and Disability Insurance (OASDI) program trust fund runs out in 2035, OASI income would be sufficient to pay 75% of OASI scheduled benefits.
“With many baby boomers already in retirement and only 17 years until insolvency, time is running out to make thoughtful reforms to the program,” the Committee for a Responsible Federal Budget said Thursday in response to the report. “Policymakers should act soon and put all options on the table to make Social Security solvent.”
Assuming continued reallocations, all Social Security beneficiaries — regardless of age or income — are projected to face a 23% benefit cut in 2034, when today’s 50-year-olds reach the normal retirement age and today’s youngest retirees turn 79, the Committee highlights. “Cuts would grow over time, reaching 27% by 2091.”
Social Security will pay out $27 billion more in benefits than it will generate in tax revenue this year, and cash-flow deficits over the next decade will total $1.4 trillion. Annual deficits will grow to 3.77% of payroll (1.36% of GDP) by 2037 and 4.48% of payroll (1.54% of GDP) by 2091, the report states.
Further, as the Committee for a Responsible Federal Budget notes, despite a temporary “reallocation” of payroll tax revenue, the Trustees project the Disability Insurance (SSDI) trust fund will run out of reserves by 2028.