The annual Social Security and Medicare Trustees Reports, released on Monday, found that as in previous years, the Social Security and Medicare programs “both continue to face significant financing issues.”
While the Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100% of total scheduled benefits until 2033, unchanged from last year’s report, the Disability Insurance (DI) Trust Fund is projected to be able to pay 100% of total scheduled benefits through one additional year to at least 2098.
In a bit of “Inside the Beltway” math, the Board of Trustees suggested that it’s “useful to consider the findings for the two Social Security trust funds (OASI and DI) on a combined basis,” even though doing so by actually combining the two funds requires a change in the law.
“If the OASI Trust Fund and the DI Trust Fund projections are combined, the resulting projected fund (designated OASDI) would be able to pay 100% of total scheduled benefits until 2035, 1 year later than reported last year,” the report read. “At that time, the projected fund’s reserves would become depleted, and continuing total fund income would be sufficient to pay 83% of scheduled benefits.”
The trustees recommended that lawmakers address the projected trust fund shortfalls in a timely way to phase in necessary changes gradually and give workers and beneficiaries time to adjust their expectations and behavior.
“So long as Americans across our country continue to work, Social Security can — and will — continue to pay benefits,” Social Security Commissioner Martin O’Malley said in a statement. “Congress can and should take action to extend the financial health of the Trust Fund into the foreseeable future, just as it did in the past on a bipartisan basis."
Andrew Biggs, former Principal Deputy Commissioner of the Social Security Administration who was nomitated to the Social Security Advisory Board by President Biden, said the trustees project the program's finances based on their assumptions about economic growth and population aging going forward.
"But those assumptions for the future start with the economy today, which was stronger over the past year or so than the Trustees had previously assumed," Biggs explained. "That stronger starting point gives the Trust Funds an extra year of life, while reducing the long-term funding gap by about 3%."
Ongoing Solvency Concerns
If the fund’s reserves are depleted as predicted in 2033, Social Security recipients will receive 79% of total scheduled benefits. Solvecy concerns overall continue to make headlines, as do calls for reform.
“We have long known that Social Security is on an unsustainable financial path," said Bipartisan Policy Center Chief Economist Jason Fichtner. "Today’s Social Security Trustees report marks yet another year of inaction by lawmakers to protect this crucial program on which so many Americans depend. Too few politicians are willing to propose serious reforms and make the difficult choices needed to strengthen and save the program. Instead, leading voices on both sides of the aisle have buried their heads in the sand, proposing purely partisan policies or vowing not to touch the program."
