July 28, 2015 — If you were hoping for great news in the annual report from the Social Security Trustees, you will be disappointed – the program’s trust funds will still be exhausted in less than 20 years. However if you were looking for a doomsday report, you won’t find that either. Even when the Social Security trust funds are exhausted at the current projection date of 2034, current revenues will still be able to fund about 75% of promised benefits. But to avoid significant cuts to benefits, the program needs to be reformed sooner rather than later.
Here are some other facts from the Trustees Full Report:
– The 75-year deficit declined modestly from 2.88 percent to 2.68 percent of payroll – that is a slight improvement. Put another way, if total SS contributions (employee and employer combined) were increased 2.68%, the trust funds would not run out of money in 75 years under current assumptions.
– The deficit as a percent of GDP remains at about 1 percent.
– Trust funds will be exhausted one year later, from 2033 to 2034.
– The exhaustion of the trust fund does not mean that Social Security is “bankrupt.” Payroll taxes will still cover about three quarters of promised benefits after 2034.
– The disability insurance program’s trust fund is expected to be exhausted next year, and it needs immediate attention.
The report goes on to say that the problem is manageable, if action is taken. After the last time reforms were made to the program (1983) the corrections resulted in several years of surplus.
Comments: Do you think your elected representatives have the courage to tackle Social Security reform? We don’t think ours do. What do you think should be done to protect future beneficiaries and the system? (Please note that political rants will not be published).