The Security Board of Trustees released its annual report on the long-term financial status of the Social Security Trust Funds on June 22.
Given how important the Social Security retirement, survivors and disability programs are, both on a national and individual level, I think everyone should have at least a general awareness of the report information and refer you to the Highlights and Trust Fund Financial Operations in 2015 sections.
There are two separate Social Security trust funds, the Old-Age and Survivors Insurance (OASI) fund and Disability Insurance (DI) fund. While by law these are separate, overall fund information is often combined for simplicity as the OASDI funds. The Trustees report has data about each separate fund and both combined.
Excerpts from the Highlights:
At the end of 2015, the OASDI program was providing benefit payments1 to about 60 million people: 43 million retired workers and dependents of retired workers, 6 million survivors of deceased workers, and 11 million disabled workers and dependents of disabled workers.
During the year, an estimated 169 million people had earnings covered by Social Security and paid payroll taxes on those earnings.
Total expenditures in 2015 were $897 billion. Total income was $920 billion, which consisted of $827 billion in non-interest income and $93 billion in interest earnings. Asset reserves held in special issue U.S. Treasury securities grew from $2,789 billion at the beginning of the year to $2,813 billion at the end of the year. …
Under the Trustees’ intermediate assumptions, Social Security’s total income is projected to exceed its total cost through 2019, as it has since 1982. The 2015 surplus of total income relative to cost was $23 billion. … The 2015 deficit of non-interest income relative to cost was $70 billion. For 2016, the program is projected to have a total-income surplus of $16 billion, and a non-interest-income deficit of $73 billion.
The Trustees project that the asset reserves of the OASI Trust Fund, together with continuing program income, will be adequate to cover program costs over the next 10 years under the intermediate assumptions. …
Under the Trustees’ intermediate assumptions, projected OASDI cost will exceed total income by increasing amounts starting in 2020, and the dollar level of the combined trust fund reserves declines until reserves become depleted in 2034. … Considered separately, the DI Trust Fund reserves become depleted in the third quarter of 2023 and the OASI Trust Fund reserves become depleted in 2035. …
Projected OASDI cost generally increases more rapidly than projected non-interest income through 2038 primarily because the retirement of the baby-boom generation will increase the number of beneficiaries much faster than the number of covered workers increases, as subsequent lower-birth-rate generations replace the baby-boom generation at working ages. …
Under the intermediate assumptions, DI Trust Fund asset reserves are projected to become depleted in the third quarter of 2023, at which time continuing income to the DI Trust Fund would be sufficient to pay 89 percent of DI scheduled benefits. … The OASI Trust Fund reserves are projected to become depleted in 2035, at which time OASI income would be sufficient to pay 77 percent of OASI scheduled benefits.
… Lawmakers have a broad continuum of policy options that would close or reduce Social Security’s long-term financing shortfall. Cost estimates for many such policy options are available at www.ssa.gov/OACT/solvency/provisions/.
The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them. Implementing changes sooner rather than later would allow more generations to share in the needed revenue increases or reductions in scheduled benefits and could preserve more trust fund reserves to help finance future benefits. Social Security will play a critical role in the lives of 61 million beneficiaries and 171 million covered workers and their families in 2016. With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations.
Next time, information from the 2016 Trustees Report, Financial Operations, section.