The main Social Security trust fund for retirees has a slightly improved outlook and now has a projected depletion date of 2034, one year later than last year's projection, according to the latest Social Security trustees' annual report.
If the trust fund were to become depleted, the fund's income would be sufficient to pay 77% of its scheduled benefits, said the report issued Thursday.
Collectively, the Social Security trust funds — one that covers retirees and their families and one that covers disabled workers and their families — will be out of money by 2035, one year later than last year's report projected. On its own, the disability insurance trust fund is no longer projected to go insolvent within the 75-year projection period. Last year's report project it to be depleted in 2057.
Changes were made to near-term economic data and assumptions reflecting that the recovery of employment, earnings and GDP from the 2020 recession has been faster and stronger than projected in last year's report, resulting in higher payroll tax receipts and higher revenue from income taxation of Social Security benefits, according to the report. Moreover, real interest rates are projected to be slightly higher in the near term, lowering the present value of projected future deficits, the report noted.
"The pandemic is projected to have continuing significant effects on the (trust funds) in the near term, and the future course of the pandemic is uncertain," the report stated. "However, the economic recovery from the brief recession in 2020 has been stronger and faster than assumed in last year's report."
Shai Akabas, director of economic policy at the Bipartisan Policy Center, said in a statement that solutions are needed now. "Social Security's financial shortfall has been well known for years, and now it's staring us in the face just over a decade away," he said. "This year's report shows yet again that we are well past the time for talking points and partisan entrenchment."
In the report, much like last year, the Social Security 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," the report stated.
