Social Security Trust Fund May Fall Short One Year Earlier Than Expected

The combined asset reserves of the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund are on track to become depleted in 2034, according to the Social Security Administration Board of Trustees’ annual report, which was released Friday.

The depletion is expected one year earlier than was projected last year, with payable benefits projected to fall to 80% of expected levels.

The report projected that the OASI Trust Fund, on its own, will run dry in 2033, one year sooner than last year’s estimate, with 77% of benefits payable at that time. Meanwhile, the DI Trust Fund asset reserves, on their own, are not projected to become depleted during the 75-year projection period ending in 2097.

In 2022, the asset reserves of the combined OASI and DI Trust Funds declined by $22 billion, coming to a total of $2.830 trillion, according to the report.

The combined reserves of the OASI and DI funds, along with projected program income, are sufficient to cover the expected program cost over the next 10 years, but the report states that the ratio of reserves to annual cost is projected to decline from 204% at the beginning of 2023 to 96% at the beginning of 2029. The ratio is expected to remain below 100% for the remainder of the 10-year short-range period.

This means the OASI and DI Trust Funds, taken as a combined unit, fail the Trustees’ test of short-range financial adequacy. Considered separately, the OASI Trust Fund also fails this test, but the DI Trust Fund satisfies the test. 

Social Security’s total cost is projected to be higher than its total income in 2023 and all later years. Total cost began to exceed total income in 2021, and the cost has exceeded its non-interest income since 2010.

Total income, including interest, to the combined OASI and DI funds came to $1.222 trillion in 2022, while total expenditures from the combined funds were $1.224 trillion, the report stated.

In addition, Social Security paid a total of $1.232 trillion in benefits during calendar year 2022, and there were about 66 million beneficiaries by the end of the year. An estimated 181 million people had earnings covered by Social Security and paid payroll taxes.

According to the report, it took $6.7 billion to administer the Social Security program in 2022, which was reported as 0.5% of total expenditures.

The Social Security Administration Board of Trustees recommends that lawmakers address the projected trust fund shortfall in a “timely way” 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 Trustees’ stated. “Social Security will play a critical role in the lives of 67 million beneficiaries and 180 million covered workers and their families during 2023. With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations.”