A year ago, the trustees report on Social Security projected the year, 2034, in which the agency would face insolvency if Congress does not act to shore up the retirement and disability trust funds, but in the trustees most recent financial report released in June 2022 indicates another year of solvency for the combined trust funds that will remain solvent until 2035.
This may not seem like earth-shattering news, but any movement to extend the solvency of Social Security’s programs is good news. Additionally, the report indicated that Social Security’s Disability Insurance program is now solvent for the next 75 years on its own when last year’s projections predicted insolvency by 2057.
It is important to understand that insolvency in the trust funds does not indicate that Social Security will be totally broke and unable to pay any benefits. The projections, if Congress does not act to change the current situation, indicate that by 2035 the agency will only be able to pay about 80 percent of benefits that are owed. Below is the conclusion of the trustees’ report that explains the health of the trust funds moving forward.
Under the intermediate assumptions, the projected hypothetical combined OASI and DI Trust Fund asset reserves become depleted and unable to pay scheduled benefits in full on a timely basis in 2035. At the time of depletion of these combined reserves, continuing income to the combined trust funds would be sufficient to pay 80 percent of scheduled benefits. The OASI Trust Fund reserves are projected to become depleted in 2034, at which time OASI income would be sufficient to pay 77 percent of OASI scheduled benefits. DI Trust Fund asset reserves are not projected to become depleted during the 75-year period ending in 2096.
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. Social Security will play a critical role in the lives of 66 million beneficiaries and 182 million covered workers and their families during 2022. With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations.
