Social Security Reserves to Be Depleted Earlier than Previously Expected
The annual trustees report, which was released on Tuesday, found that Social Security benefits could be paid in full until 2034.
Social Security’s trust fund will be able to pay full retirement benefits until 2033, one year earlier than predicted in 2020’s report.
At that time, the reserves for the Old-Age and Survivors Insurance Trust Fund, which pays survivor and retirement benefits, will run out and tax revenues will be able to cover 76% of scheduled benefits, according to a summary of the trustees report, which was released on Tuesday.
Additionally, the Disability Insurance Trust Fund, which covers disability payments, is currently able to provide benefits until 2057 before reserves run out. That’s eight years earlier than predicted in the 2020 report. If that happens, tax income will be able to cover 91% of benefits, according to the summary.
The Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund are separate entities but hypothetically, if they were combined, the funds would be able to provide benefits until 2034, one year earlier than previously expected, according to the summary.
The report projected that key factors, such as employment, earnings and interest rates, should gradually rise after a steep drop in the second quarter of 2020 until they fully recover by 2023.
The trustees report also assumed higher mortality rates due to the pandemic through 2023. Immigration and childbearing were expected to fall from predictions in the 2020 report with a potential for an uptick in a few years. These changes to short-term assumptions affected the outlook of the program, though it was difficult to predict the long-term consequences, the summary says.
“Given the unprecedented level of uncertainty, the Trustees currently assume that the pandemic will have no net effect on the individual long-range ultimate assumptions,” according to the summary of the report. “At this time, there is no consensus on what the lasting effects of the COVID-19 pandemic on the long-term experience might be, if any. The Trustees will continue to monitor developments and modify the projections in later reports.”
Social Security’s trust fund reserves totaled $2.9 trillion at the end of 2020, an increase of $11 billion.