The Social Security program’s reserves will be depleted in 2035, with continuing income to the combined trust funds being sufficient to pay 80% of scheduled benefits, the board of trustees predicted in its annual report, released Monday.
The old age and survivor insurance trust fund reserves are projected to be depleted in 2034, at which time OASI income would be sufficient to pay 77% of OASI scheduled benefits, the report states.
The disability income trust fund’s asset reserves are projected to become depleted in 2052, at which time continuing income to the DI Trust Fund would be sufficient to pay 91% of DI scheduled benefits.
“The report shows the depletion of the combined funds is one year later than projected last year — 2034, last year, and 2035, this year,” Nancy Altman, president of Social Security Works, a group that supports expanding the Social Security system, told ThinkAdvisor in an email message. “That kind of variation is not surprising when projecting out so far into the future.”
The 2019 Trustees Report projects Social Security’s cumulative surplus to be $2.9 trillion, according to Social Security Works. The report shows that Social Security is fully funded until 2035, 93% funded for the next 25 years, 87% funded over the next 50 years, and 84% funded over the next 75 years, the group said.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, added in a Monday statement that the report shows Social Security “faces a nearly $15 trillion funding shortfall and will face insolvency in only 16 years. That’s when today’s 51-year-olds reach the normal retirement age and when today’s youngest retirees turn 78. At that point, if not addressed, the law calls for a devastating 20% across-the-board cut for all Americans who rely on the program.”
Medicare’s Hospital Insurance trust fund will run out even sooner in 2026, when today’s 58-year-olds become eligible and today’s newest beneficiaries turn 72, MacGuineas said.
“The 2019 Social Security Trustees Report confirms that Social Security remains fully affordable, notwithstanding its modest projected shortfall,” Altman said. “The underreported story is that Democrats are moving forward with plans to raise sufficient revenue to eliminate the shortfall and cover the cost of expanded benefits.”
The Social Security 2100 Act, introduced by Rep. John Larson, D-Conn., “has over 200 co-sponsors” in the House, Altman said. “Larson has held several hearings on the bill and intends to bring it to the House floor this spring.”
While the combined basis is the way everyone tends to look at the trust funds, “by law, if either fund is unable to cover all the costs of its benefits and related administrative costs, it would be unable to pay full benefits on time,” Altman explains, but that “has never happened.”
The Social Security 2100 Act, “which expands benefits, has a provision combining the two trust funds so that reality comports with how we all refer to them,” Altman said.