The Social Security Board of Trustees recently released its annual report detailing the long-term status of the Social Security Trust funds.
The combined trust fund assets are projected to be emptied by 2034, which is one year earlier than last projected, with an estimate of 78% of benefits payable at that time.
Of its different funds, the Old-Age and Survivors Insurance Trust Fund (OASI), as it is named, will be completely depleted in 2033, with just 76% payable, unless Congress acts. This is the fund for regular retirees.
The SSI Disability Insurance Trust Fund (DI) is estimated to be empty by 2057, which is now eight years earlier than last year’s estimate, with 91% of benefits still payable. This is the fund providing for individuals who are disabled.
The asset reserves of the combined programs did increase $11 billion in 2020, now totaling $2.908 trillion.
Even with this increase, the annual costs of the program are expected to exceed the annual income for the first time since 1982 and remain that way for a 75-year projection.
Another thing to note from the report is the total income to the combined OASI and DI Trust Funds was $1.118 trillion in 2020, whereas the total expenditures were $1.107 trillion.
According to Acting Commissioner of Social Security, Kilolo Kijakazi, “The Trustees’ projections in this year’s report include the best estimates of the effects of the COVID-19 pandemic on the Social Security program.”
The pandemic had a huge impact that no one could have predicted. Many people stopped working and some older Americans who, under normal circumstances, had no intention of retiring in the last two years, decided it wasn’t worth remaining in the workforce through a pandemic and retired early. This affected the flow of money going into these programs, as well as how much is being taken out.
Because of this, it is believed that the asset reserves began to decline in 2021. The projected deficit from the 75-year period is expected to be 3.54%, which is higher than last year’s report when the percentage was only 3.21.
In 2020, approximately 175 million people are stakeholders in the Social Security system, including those for whom FICA payroll deductions are made that cover earnings and payroll taxes, as well as beneficiaries. It is calculated that Social Security paid $1.096 trillion in benefits to 65 million beneficiaries in 2020.