The Social Security Board of Trustees released its annual report on the long-term financial status of its funds last week. The Board estimates that the combined assets of the Old-Age and Survivors Insurance (OASI), and Disability Insurance (DI) Trust Finds are projected to become depleted in 2033. This estimate is unchanged from last year’s report. Perhaps more concerning is the fact the Board projected that Social Security’s disability trust fund will become insolvent in 2016.
Essentially, the report indicates that while the projected combined OASI and DI Trust Fund asset reserves increase through 2020 they start to decline in 2021 and by 2033 will become depleted. This will result in an inability to pay scheduled benefits in full on a timely basis.
The Board estimates that when the combined asset reserves are depleted, the income to the combined trust funds will allow for 77 percent of scheduled benefits to be paid. With respect to the DI Trust Fund specifically, the Board estimates that it will be able to continue to pay all benefits in a timely manner until 2016, when it will be only able to pay approximately 80 percent of scheduled benefits in a timely manner.
Obviously, this news has significant implications for not only the 57 million individuals currently receiving benefit payments, but also for those who may rely on this safety net in the not-so-distant future. However, it is important to note these projections are predicated on the assumption that changes will not be made to the current system. If relatively modest adjustments are made to the current system, the Social Security system as a whole may remain solvent.
In order for the Trust Funds to remain solvent throughout the 75 year projection period, The Board recommends increasing payroll taxes, decreasing scheduled benefits, or a combination thereof.
To review the complete report here.
