From the Social Security Report
Much as when the sun comes out during a hurricane, one should only make urgent and necessary repairs and forgo the celebration that the storm clouds are gone. That’s because the “eye” of the storm is but a temporary reprieve. And so, it could be said of the latest report of April 22, 2019 of the Social Security Board of Trustees, which noted the Old-Age and Survivors Insurance (OASI) Trust Fund is projected to become depleted in 2034, with 77 percent of benefits payable at that time. The Disability Insurance (DI) Trust Fund is estimated to be depleted in 2052, 20 years later than last year’s estimate, with 91 percent of benefits still payable. The latter is due mainly to declining applications and fewer disabled people collecting benefits.
The Trustees announced that the total annual cost of the Social Security program (mainly benefit payments) is projected to exceed total annual income in 2020 and remain higher throughout the 75-year projection period. Last year’s report noted the program would run a deficit in 2019. The robust U.S. economy is the cause of the one year reprieve from a deficit situation occurring this year. Nonetheless, asset reserves are expected to begin a decline in 2020. When interest income is excluded, Social Security’s cost has actually exceeded income every year since 2010.
Among the other highlights in the report are these:
- Social Security paid nearly $989 billion in benefits to 63 million beneficiaries in calendar year 2018.
- The projected actuarial deficit over the 75-year long-range period is 2.78 percent of taxable payroll – lower than the 2.84 percent projected in last year’s report.
- In 2018, 176 million people had earnings covered by Social Security and paid payroll taxes.
- The $6.7 billion cost to administer the Social Security program in 2018 was a very low 0.7 percent of total expenditures.
The Trustees did make their annual plea to Congress to address the impending shortfalls, lest benefits be slashed automatically across the board in just over a decade when all asset reserves (surpluses) are depleted. View the 2019 Trustees Report here.
The Association of Mature American Citizens (AMAC) has a reform plan to preserve and modernize Social Security by making modest changes in cost of living adjustments and the retirement age, without additional tax increases on workers. AMAC advocates for a bipartisan compromise, “The Social Security Guarantee Act,” taking selected portions of bills introduced by former Rep. Johnson (R-TX) and Rep. Larson (D-CT) and merging them with the Association’s own well researched ideas. One component is Social Security PLUS, a new yet voluntary early retirement plan that would allow all earners to have more income available at retirement. This component is intended to appeal especially to younger workers. AMAC is resolute in its mission that Social Security be preserved and modernized and has gotten the attention of lawmakers in DC, meeting with a great many congressional offices and their legislative staffs over the past several years. Read AMAC’s plan here.
Jeff Szymanski works in political communications for the Association of Mature American Citizens (AMAC), a senior benefits organization with nearly 2 million members. He is a frequent contributor here and of articles to draw attention to Social Security’s ailing financial health.