SOCIAL SECURITY UPDATE: OFFICIALS TOUT 'MEASURE OF GOOD NEWS' AMID DEFICIT
The Social Security program will be able to pay all scheduled benefits in full until 2035, a year longer than they previously expected, thanks to the strong performance of the U.S. economy, the Social Security Board of Trustees said.
Experts had recently warned that the Social Security's retirement benefits trust fund was likely to deplete its reserves in 2034, at which time the program would no longer be able to pay full benefits.
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Instead, the Social Security Administration (SSA) would only be able to pay about 77 percent of scheduled benefits to recipients—many of which rely on the payments as their main source of income.
But this year's annual report to Congress on the financial status of the health of the Social Security Trust Funds brings some good news to both the SSA and recipients.
The combined asset reserves of the program's two funds—the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds—are projected to have enough revenue to pay all scheduled benefits and associated administrative costs until 2035, according to the report. At that time, there will be enough money to pay 83 percent of scheduled benefits.
The depletion of the program's funds in recent years has been dramatic. The asset reserves of OASI and DI Trust Funds dropped by $41 billion in 2023 to a total of $2.788 trillion, according to the 2024 report.
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But the strength of the economy—with low unemployment and higher job and wage growth—has moved the deadline for the program's depletion of funds a year further down the line.
"This year's report is a measure of good news for the millions of Americans who depend on Social Security, including the roughly 50 percent of seniors for whom Social Security is the difference between poverty and living in dignity—any potential benefit reduction event has been pushed off from 2034 to 2035," said Martin O'Malley, Commissioner of Social Security, in a written statement.
"More people are contributing to Social Security, thanks to strong economic policies that have yielded impressive wage growth, historic job creation, and a steady, low unemployment rate," he continued. "So long as Americans across our country continue to work, Social Security can—and will—continue to pay benefits."
But Congress' action is needed to reform the system and make it sustainable. America has changed dramatically since the creation of Social Security, with the aging workforce presenting unique challenges to the program—including an imbalance between workers and retirees.
"Congress can and should take action to extend the financial health of the Trust Fund into the foreseeable future, just as it did in the past on a bipartisan basis," O'Malley said.
"Eliminating the shortfall will bring peace of mind to Social Security's 70 million-plus beneficiaries, the 180 million workers and their families who contribute to Social Security, and the entire nation."
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Among the possible solutions which could be considered by Congress, are raising payroll taxes, lowering benefits and increasing the retirement age. Some of these options are bound to be incredibly unpopular among Americans.
The Social Security Board of Trustees counts six members, including O'Malley; Janet Yellen, Secretary of the Treasury and Managing Trustee; Xavier Becerra, Secretary of Health and Human Services; and Julie Su, Acting Secretary of Labor. The two public trustee positions are currently vacant.
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