Social Security can sustain full benefit payments for only another 20 years, according to the latest report from the program’s trustees, who this year shaved three years of solvency off of earlier projections. After 2033, the trust fund’s reserves would only be able to support roughly three-quarters of beneficiaries.
The combined Social Security retirement and disability programs “have dedicated funds sufficient to cover benefits for the next 20 years, but in 2033, incoming revenues and trust fund resources will be insufficient to maintain payment of full benefits,” Treasury Secretary Timothy Geithner said Monday.
Fluctuations in long-term balance projections are common, given the many uncertain economic and demographic variables involved. But this year’s report, Social Security’s six trustees agreed Monday, was stark.
Geithner – who opened his remarks with an affirmation that the program would be able to fill its commitments to current beneficiaries for “years to come” -- said the projections were more pessimistic this year in large part due to an assumption of lower real wages over the next 75 years.
Fellow Trustee Charles Blahous, an economic adviser in the George W. Bush administration, was less guarded than Geithner in his assessment of the state of Social Security.
“Never since the 1983 reforms have we come as close to trust-fund depletion as we are right now,” Blahous said. “It is clear we don’t have a great deal of time left to resolve the imbalance… Bipartisan action needs to be responsible, decisive and prompt.”
The shortfall between Social Security’s tax revenues and expenditures over the next 75 years is pegged at 2.67 percent of taxable payroll, a jump of 0.44 percentage points from last year’s projection. Blahous said a combination of relatively minor adjustments, such as a higher annual cost of living adjustment and various methodological changes, played a role in this year’s projections.
The program’s trustees -- the secretaries of the Treasury, Health and Human Services, and Labor Departments; the commissioner of Social Security; and two public trustees – release a report each spring detailing the program’s finances. In 2011, the trustees predicted the program’s trust fund reserves would be exhausted in 2036; the year before, they projected solvency until 2037.