The Social Security program is an integral part of the economic security of millions of Americans. Every year, the Social Security Board of Trustees releases a report that examines the finances of the program and provides an overview of the past, present, and future of Social Security. This year’s report, released in April 2021, highlights the challenges that Social Security faces in the years to come.
The report found that Social Security’s trust funds are currently running a surplus, with assets totaling $2.9 trillion. This is due in part to the increase in payroll tax revenue as a result of the Tax Cuts and Jobs Act of 2017. However, the report also found that the program will experience a deficit by 2033. This deficit is caused by two main factors: an aging population and increasing longevity.
As the baby boomer generation continues to retire, more people will become eligible for Social Security benefits. At the same time, rising life expectancies are resulting in more people collecting benefits for longer periods of time. This places a strain on the Social Security trust fund, as the cost of benefits is rising faster than the payroll tax revenue that funds the program.
The Trustees Report also found that Social Security’s disability insurance trust fund is in even worse shape, with a deficit expected by 2029. This is due to the number of people filing for disability benefits increasing faster than the number of workers paying into the trust fund.
The report concludes by noting that Social Security will remain solvent through 2045, but that steps must be taken to ensure the program’s long-term solvency. This could include raising the payroll tax rate, increasing the earnings cap on which the payroll tax is applied, or adjusting the formula used to calculate cost-of-living adjustments. The Trustees Report also notes that any changes to the program should be made in a way that does not disproportionately impact lower-income recipients.
The Trustees Report provides a comprehensive overview of Social Security’s finances and offers insight into the long-term solvency of the program. It is an important resource for anyone interested in understanding the future of Social Security and the steps that need to be taken to ensure its sustainability.