Social Security Trust Fund Set To Choke In 2033
Social Security's largest trust fund is on track to deplete its reserves as soon as 2033, according to a Friday report from the program's board of trustees. The estimate shaves one year off the previous projection for the Old-Age and Survivors Insurance (OASI) Trust Fund, which distributes Social Security benefits to retirees.
If the reserves are depleted, projected income for the account would only cover 77% of scheduled benefits.
The program's smaller Disability Insurance (DI) fund is just fine, and won't run out for at least 75 years according to the board. Out of the roughly 66 million people receiving Social Security, the vast majority - 57 million of them, receive benefits from the OASI Trust Fund, while 9 million receive benefits through the DI Trust Fund.
While both funds are separate, the accounts have usually been considered as a combined fund when discussing the program’s solvency. Lawmakers have also allowed inter-fund borrowing between accounts to temporarily extend solvency in the past.
The retirement and disability trust funds together could cover 100 percent of total scheduled benefits until 2034, according to the report, one year sooner than the board previously reported.
If both funds are depleted before Congress can act to replenish them, the government would only be able to cover 80 percent of scheduled benefits to retirees and disabled beneficiaries. -The Hill
The updated projections take new inflation and output data into account, while the board also "revised down the levels of gross domestic product (GDP) and labor productivity by about 3 percent over the projection period."
The changes were largely attributed to "the shifting age distribution of the adult population," - in particular the Baby Boomer generation, which moved "increasingly above age 62 for retired worker benefits, and above normal age, where DI benefits are no longer applicable."
"The Trustees continue to recommend that Congress address the projected trust fund shortfalls in a timely fashion to phase in necessary changes gradually," said Kilolo Kijakazi, acting commissioner of Social Security.
"Social Security will continue to play a critical role in the lives of 67 million beneficiaries and 180 million workers and their families during 2023," Kijakazi added. "With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations."