Good News, Bad News in Social Security Trustees Report
The good news is that the funding level of that critical financial underpinning of the nation’s retirement security didn’t decrease during the past year.
On the other hand — and the bad news in the report
from the Social Security Board of Trustees — is that the combined asset reserves of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are — still — projected to become depleted in 2034, the same as projected last year — and with just 77% of benefits payable at that time.
The trustees note that while combined trust fund reserves are still growing and will continue to do so through 2021, beginning in 2022, the total annual cost of the program is projected to exceed income.
Non-interest income fell below program costs in 2010 for the first time since 1983. For 2016, cost for the year exceeded non-interest income by $53 billion, and for 2017, total income for the program is projected to exceed cost for the year by $59 billion, and non-interest income is projected to be $27 billion less than program cost for the year. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.
One bright spot in the report: The DI Trust Fund will become depleted in 2028, extended from last year’s estimate of 2023, with 93% of benefits still payable. In last year’s report, disabled worker beneficiaries were projected to rise from 8.9 million at the end of 2015 to about 9 million at the end of 2016 — but the number dropped to about 8.8 million at the end of 2016. The ultimate disability incidence rate assumptions are unchanged from the last report, but this year’s report “reflects lower recent incidence rates and a more gradual rise to the ultimate DI incidence rates,” and it is those changes that the trustees say are primarily responsible for the change in the DI reserve depletion date from 2023 in last year’s report to 2028 in this year’s report.
Not surprisingly, the 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,” pointing out that implementing changes sooner rather than later would allow more generations to share in the needed revenue increases or reductions in scheduled benefits and could preserve more trust fund reserves to help finance future benefits.”
Social Security paid benefits of $911 billion in calendar year 2016, and there were about 61 million beneficiaries at the end of the calendar year, according to the report. It cost about $6.2 billion to administer the program, and the combined Trust Fund asset reserves earned interest at an effective annual rate of 3.2% in 2016.