Social Security is often the centerpiece of seniors’ fixed income in later life, and while predictions remain limited for the life of the program’s trust fund, there was some good news recently from the Social Security Board of Trustees this week: the fund will last a year longer than predicted in 2023.
“The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to have enough dedicated revenue to pay all scheduled benefits and associated administrative costs until 2035, one year later than projected last year, with 83 percent of benefits payable at that time,” the board said in an announcement.
Featured in the board’s 2024 Annual Report to Congress, the trustees made several announcements about the longevity of the Social Security trust fund. Asset reserves of the combined OASI and DI Trust Funds declined by $41 billion in 2023 to a total of $2.788 trillion, and the “total annual cost of the program is projected to exceed total annual income in 2024 and remain higher throughout the 75-year projection period,” the trustees said.
Total costs began exceeding total income in 2021, but Social Security’s cost has exceeded its non-interest income since 2010.
But the year when the combined trust fund reserves are projected to become depleted, if Congress does not act, is now 2035. Beginning that year, “there would be sufficient income coming in to pay 83 percent of scheduled benefits,” the trustees said.
While there remains a lack of political will in Congress to address the challenges posed to the longevity of the trust fund and the larger program, this data provides “a measure of good news” according to Martin O’Malley, commissioner of the Social Security Administration (SSA).
That’s particularly true “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,” O’Malley said.
O’Malley added that there are more contributors to Social Security which he contributes to current economic policies, which have yielded growth in wages and low unemployment rates, he said.
“So long as Americans across our country continue to work, Social Security can — and will — continue to pay benefits,” he said. “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.”
Eliminating the existing shortfall would alleviate concerns for Social Security beneficiaries, and workers paying into the program, he added.
Despite political pressure to act and lawmakers failing to come to a consensus, the most recent effort to address the program’s challenges came from a bill supported by Democrats and independents in the U.S. House of Representatives and U.S. Senate.
The proposal would increase monthly benefits and require the SSA to use a different inflation-calculation formula, which currently uses the Consumer Price Index for Urban Wage Earners (CPI-W) from the previous year. Since Social Security benefits have not kept pace with the rising cost of living for the majority of seniors who live on a fixed income, the lawmakers argue that this calculation formula should be changed.
“The Consumer Price Index for Americans aged 62 or older (CPI-E) is another price index that is more reflective of the actual costs incurred by older adults; for example, within CPI-E, medical expenses are weighted more heavily than they are in CPI-W,” a fact sheet about the proposal stated.
The Senate version currently has no Republican co-sponsors, however, and the House version has no co-sponsor.
