The last 11 Trustees Reports have indicated that Social Security’s Old-Age, Survivors, and Disability Insurance (OASDI) Trust Fund reserves would become depleted between 2033 and 2035 under the intermediate set of assumptions provided in each report. If no legislative change is enacted, scheduled tax revenues will be sufficient to pay only about three-fourths of the scheduled benefits after trust fund depletion. Policymakers have developed proposals and options that have financial effects on the OASDI Trust Funds. Many of these proposals and options have the intent of addressing the long-range solvency problem.
The Office of the Chief Actuary also develops estimates of proposals to change the Supplemental Security Income (SSI) program.
We have prepared letters or memoranda for many of these proposals and options. Each letter or memorandum provides an actuarial analysis showing the estimated effect on the financial status of the Social Security program and/or the SSI program.
Publication Date: accessed 4 Dec 2022
Publication Site: Office of the Chief Actuary, Social Security Administration
As seen from subtracting the total cost shown in Table 2 from the total income shown in Table 1, Social Security paid out $56.3 billion more in benefits and expenses than it collected in income.
Because Social Security has trust funds, the total costs of 2021 were still met. However, the trust funds declined in 2021 by the $56.3 billion that costs exceeded income. At the end of 2020, the trust funds totaled $2,908.3 billion, and at the end of 2021, the trust funds totaled $2,852.0 billion.
In a post-mortem of the Social Security Trust Fund report released Thursday, the Bipartisan Policy Center hosted a webinar featuring speaker Steve Goss, chief actuary of the Social Security Administration. Goss looked beyond the headlines stating that the Old-Age and Survivors Insurance will run out in 2034 (a slight improvement from last year’s forecasted demise of 2033) and that the Disability Insurance fund is now solvent for another 75 years.
“We’re in a little better shape [than 2021] because the economy has come roaring back to such a wonderful extent,” Goss said.
He also pointed out that labor demand has had a “remarkable rebound.” For example, it took 10 years for the job market to come back after the 2008 Great Recession. However, the 2020 recession, which was “very deep and very abrupt,” has also reversed just as quickly and in the first quarter of 2022, “we are virtually back to the high level that we had just before the start of the recession.”
• The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, will be able to pay scheduled benefits on a timely basis until 2034, one year later than reported last year. At that time, the fund’s reserves will become depleted and continuing tax income will be sufficient to pay 77 percent of scheduled benefits.
• The Disability Insurance (DI) Trust Fund, which pays disability benefits, is no longer projected to be depleted within the 75-year projection period. By comparison, last year’s report projected that it would be able to pay scheduled benefits only until 2057.
• The OASI and DI funds are separate entities under law. The report also presents information that combines the reserves of these two funds in order to illustrate the actuarial status of the Social Security program as a whole. The hypothetical combined OASI and DI funds would be able to pay scheduled benefits on a timely basis until 2035, one year later than reported last year. At that time, the combined funds’ reserves will become depleted and continuing tax income will be sufficient to pay 80 percent of scheduled benefits.
• The Hospital Insurance (HI) Trust Fund, or Medicare Part A, which helps pay for services such as inpatient hospital care, will be able to pay scheduled benefits until 2028, two years later than reported last year. At that time, the fund’s reserves will become depleted and continuing total program income will be sufficient to pay 90 percent of total scheduled benefits.
• The Supplemental Medical Insurance (SMI) Trust Fund is adequately financed into the indefinite future because current law provides financing from general revenues and beneficiary premiums each year to meet the next year’s expected costs. Due to these funding provisions and the rapid growth of its costs, SMI will place steadily increasing demands on both taxpayers and beneficiaries.
• For the sixth consecutive year, the Trustees are issuing a determination of projected excess general revenue Medicare funding, as is required by law whenever annual tax and premium revenues of the combined Medicare funds will be below 55 percent of projected combined annual outlays within the next 7 fiscal years. Under the law, two such consecutive determinations of projected excess general revenue consitute a “Medicare funding warning.” Under current law and the Trustees’ projections, such determinations and warnings will recur every year through the 75-year projection period.
Through the mechanism of the Trust Fund, Congress can put off having to act on the fundamental demographic problem that they can’t do much about. They hope they can run the Magic Money Machine to cover all the goodies they want, and in 2034, the Boomers will mostly be over age 80. Maybe another pandemic will deal with them….
(and nobody cares about us Gen Xers. In 2034, I won’t even be eligible for Social Security old age benefits.)
Nobody expects the Social Security benefits to be cut in 2034, or whatever other magic date when the Trust Fund runs out. The only thing the current Trust Fund mechanism requires is cuts… only if Congress doesn’t actually pass legislation to “fix” the issue.
They have been doing ad hoc “fixes” to Medicare and other parts for years so as to avoid massive cuts.
Trustees for the Social Security trust fund in an annual report released Tuesday said the program is expected to pay benefits that exceed its income in 2021, the same as it anticipated last year at the outset of the pandemic.
The trustees now project elevated mortality rates related to the pandemic through 2023, and expect lower immigration and child-bearing this year and next, compared with their 2020 estimates. They also expect the pandemic has lowered worker productivity and thus economic output permanently.
Eight states have seen the biggest drops in nursing home use: Florida, Georgia, Louisiana, New Jersey, New Mexico, North Carolina, South Carolina, and Tennessee. Many of these states have experienced fast growth in their minority populations or have more generous state allocations of Medicaid funds for long-term care services delivered in the home.
Growing diversity is actually the second-biggest reason for lower nursing home residence, accounting for one-fifth of the decline, according to the study, which was funded by the U.S. Social Security Administration and is based on U.S. Census data.
The Supplement is a major resource for data on programs administered by the Social Security Administration—the Old-Age, Survivors, and Disability Insurance program, known collectively as Social Security, and the Supplemental Security Income program. The Supplement also includes program summaries and legislative histories that help users of the data understand these programs. Please note that additional disability tables and statistics can be found in the SSI Annual Statistical Report and the Annual Statistical Report on the Social Security Disability Insurance Program.
The Supplement has been published annually since 1940. Decisions affecting the future of Social Security are facilitated by the availability of relevant data over a long period. The data provide a base for research, policy analysis, and proposals for changing the programs. In addition to meeting the Social Security Administration’s information needs, the Supplement strengthens the agency’s ability to respond to requests for program data from congressional committees, government agencies at all levels, and the research community.
The Supplement is prepared by Social Security Administration staff from various components throughout the agency. I would like to express my thanks to them for their contributions.
Katherine N. Bent Acting Associate Commissioner for Research, Evaluation, and Statistics February 2021
It is better to provide death rates by age ranges for year-to-year comparisons.
When you calculate a period life expectancy, you’re incorporating the mortality rates for all the ages above the current age, and it doesn’t really capture how specific age ranges were affected. I can use these life expectancies to make estimates about the death rates, but I’m not going to – I’m trying to keep the calculations simple so that other people can follow my spreadsheets and check what I’m doing.
With age-adjusted death rates, you can capture overall mortality levels, but again, you don’t know which age ranges were affected the most.
I believe period life expectancy is used for these types of reports because people are more comfortable thinking about number of years to live, or age at death, than they are thinking about rates.
This article provides a quantitative analysis of some key features of state and local pensions, including vesting requirements, the FAS period, and the benefit formula multiplier. This analysis focuses on public pensions in states that account for large numbers of noncovered public-sector workers. Among its unique contributions is the weighting of the summary statistics by population—in this instance, by the active membership in each benefit tier. This weighting mechanism is of special importance for occupation groups such as teachers, whose number of benefit tiers are underrepresented relative to active members, and public safety workers, whose tiers are overrepresented relative to active membership.
The findings in this article provide supporting evidence of a benefit retrenchment across state and local pensions, at least in states where noncovered employment is most common. Benefit tiers that are not open to new hires tend to have shorter vesting periods, shorter FAS periods (resulting in higher FASs), and higher benefit multipliers. As states have sought to reduce pension expenses, they have tightened eligibility requirements by increasing vesting periods, and have lowered benefits by increasing the FAS period and reducing the benefit formula’s multiplier.
This is not particularly surprising, given the recent economic conditions and plan funding levels that have led to pension reforms. However, the analysis shows that those changes have not affected all types of state and local workers equally. Changes in the FAS period, for example, affect public safety workers and local-level general government employees more than they affect teachers.
Author: Glenn R. Springstead
Publication Date: February 2021
Publication Site: Social Security Administration, Social Security Bulletin