congressional budget office social security report

Congressional budget office social security report full#

Over the long term, the Trustees project Social Security’s cash shortfall (assuming full benefits are paid) will grow to 3.1 percent of payroll (1.1 percent of GDP) by 2031, 3.7 percent of payroll (1.3 percent of GDP) by 2041, and a high of almost 5.0 percent of payroll (1.7 percent of GDP) in 2077.

The Trustees estimate the program will run a cash-flow deficit of $147 billion this year – the equivalent of 1.8 percent of taxable payroll or almost 0.7 percent of GDP – and will run $2.4 trillion of cumulative deficits over the next decade. The Social Security Trustees project the program will run ongoing deficits. Social Security Faces a Large and Growing Shortfall We will provide an in-depth analysis of the 2021 Medicare Trustees’ report in a forthcoming companion piece. Meanwhile, the Medicare Hospital Insurance trust fund is only five years from insolvency and will exhaust its reserves in 2026 according to the Medicare Trustees. Based on recent estimates from the Congressional Budget Office (CBO), the trust funds will become insolvent by 2033. Social Security’s insolvency could come sooner than the Trustees project. For perspective, the average new retiree will live to age 85, meaning Social Security cannot guarantee full benefits for many current retirees, let alone for future beneficiaries. The trust funds are on course to run out of reserves when today’s 54-year-olds reach the normal retirement age and today’s youngest retirees turn 75. Upon insolvency, all beneficiaries regardless of age, income, or need will face a 22 percent across-the-board benefit cut, which will grow to 26 percent by the end of the projection window. On a theoretical combined basis – assuming revenue is reallocated between the trust funds in the years between OASI and SSDI insolvency – Social Security will become insolvent by 2034.

The Trustees project the Social Security OASI trust fund will deplete its reserves by 2033, while the SSDI trust fund will be exhausted by 2057. The Social Security program is only 13 years from insolvency, and action must be taken promptly to prevent an across-the-board benefit cut for many current and future beneficiaries. Social Security is Approaching Insolvency Given the short timeline to address the looming insolvency of Social Security – and of Medicare Hospital Insurance (addressed in a forthcoming companion paper) – policymakers should seize any opportunity to enact trust fund solutions. Acting now allows more policy options, lets policymakers phase in changes more gradually, and provides more time for workers to adjust their work and savings if necessary. Time is Running Out to Save Social Security. Lawmakers have only a few years left to restore solvency to the program, and the longer they wait, the larger and more costly the necessary adjustments will be.The 75-year shortfall is nearly 85 percent larger than it was projected to be in 2010. Social Security’s Finances are Deteriorating. Social Security’s finances have worsened over the last year – insolvency is projected to occur a year earlier, and the 75-year actuarial deficit is over 10 percent larger.Social Security’s 75-year actuarial imbalance totals 3.54 percent of taxable payroll, which is 1.2 percent of GDP or nearly $21 trillion in present value terms. Annual deficits will grow to nearly 5.0 percent of payroll (1.7 percent of GDP) by 2080 and total over 4.3 percent of payroll (1.4 percent of GDP) by 2095. Social Security Faces Large and Rising Imbalances. According to the Trustees, Social Security will run cash deficits of $2.4 trillion over the next decade, the equivalent of 2.3 percent of taxable payroll or 0.8 percent of Gross Domestic Product (GDP).Upon insolvency, all beneficiaries will face a 22 percent across-the-board benefit cut. The theoretical combined trust funds will exhaust their reserves by 2034, when today’s 54-year-olds reach the full retirement age and today’s youngest retirees turn 75. The Trustees project the Social Security Old-Age and Survivors Insurance (OASI) trust fund will deplete its reserves by 2033 and the Social Security Disability Insurance (SSDI) trust fund will become insolvent by 2057. Social Security is Only 13 Years from Insolvency. Social Security cannot guarantee full benefits to current retirees under current law.The latest Social Security projections show the program is quickly headed toward insolvency and highlight the need for trust fund solutions sooner rather than later. Today’s reports are the first to incorporate the effects of the COVID-19 pandemic, recession, response, and anticipated recovery. Today, the Social Security and Medicare Trustees released their annual reports on the long-term financial state of the Social Security and Medicare programs.

Congressional budget office social security report full#