The Social Security Board of Trustees released its annual report, April 22, 2020, on the status of the Social Security Trust Funds, and although little has changed with the retirement trust fund, the disability trust fund seems to be in good shape with a 13-year extension added before the trust fund is expected to be depleted.
The report indicated there was no change in the depletion expectations to the retirement trust fund as it is expected to be depleted by 2034. At that time the retirement trust fund is expected to be able to meet 76 percent of benefits payable, which means beneficiaries could see a reduction of 24 percent in benefits if the government does not act to stabilize the trust fund. The disability insurance trust fund is doing much better as it is not expected to be depleted until 2065 before it is only able to meet 92 percent of benefits payable. Just last year’s Trustees report indicated the disability trust fund would be depleted by 2052. Below are some of the key points from the report as issued by Social Security in a press release.
In the 2020 Annual Report to Congress, the Trustees announced:
- The asset reserves of the combined OASI and DI Trust Funds increased by $2.5 billion in 2019 to a total of $2.897 trillion.
- The total annual cost of the program is projected to exceed total annual income, for the first time since 1982, in 2021 and remain higher throughout the 75-year projection period. As a result, asset reserves are expected to decline during 2021. Social Security’s cost has exceeded its non-interest income since 2010.
- The year when the combined trust fund reserves are projected to become depleted, if Congress does not act before then, is 2035 – the same as last year’s projection. At that time, there would be sufficient income coming in to pay 79 percent of scheduled benefits.
- Total income, including interest, to the combined OASI and DI Trust Funds amounted to $1.062 trillion in 2019. ($944.5 billion from net payroll tax contributions, $36.5 billion from taxation of benefits, and $81 billion in interest)
- Total expenditures from the combined OASI and DI Trust Funds amounted to $1.059 trillion in 2019.
- Social Security paid benefits of $1.048 trillion in calendar year 2019. There were about 64 million beneficiaries at the end of the calendar year.
- The projected actuarial deficit over the 75-year long-range period is 3.21 percent of taxable payroll – higher than the 2.78 percent projected in last year’s report.
- During 2019, an estimated 178 million people had earnings covered by Social Security and paid payroll taxes.
- The cost of $6.4 billion to administer the Social Security program in 2019 was a very low 0.6 percent of total expenditures.
- The combined Trust Fund asset reserves earned interest at an effective annual rate of 2.8 percent in 2019.
The impact of the COVID-19 pandemic was not considered part of these estimates, so these calculations and future estimates could be impacted at a later time.
