The Social Security Board of Trustees today released its anticipated annual report on the long-term financial stability of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2034, the same as projected last year, with 79 percent of benefits payable at that time.
According to the 2018 Annual Report to Congress, the OASDI Trust Fund is projected to become depleted in late 2034, as compared to last year’s estimate of early 2035, with 77 percent of benefits payable at that time. The Disability Insurance Trust Fund will become depleted in 2032, extended from last year’s estimate of 2028, with 96 percent of benefits still payable.
The Medicare Board of Trustees also released their annual report for Medicare’s two separate trust funds — the Hospital Insurance (HI) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund. Findings revealed that Part D drug spending projections are lower than in last year’s report because of higher manufacturer rebates, a decline in spending for Hepatitis C drugs, and a slowdown in spending growth for diabetes drugs.
The report, released on June 5, 2018, also found that the Trust Fund will be able to pay full benefits until 2026, which is three years earlier than last year’s projections, attributable to adverse changes in program income.
Seeing the Glass Half Full, Not Half Empty
Newspapers reporting the release of the Annual Reports warned that while Medicare and Social Security are stable at this time, these programs face serious long-term financial issues. But, aging groups have their take, choosing to see the glass as half-full rather than half-empty. It only takes the will of Congress to strengthen these programs.
According to Social Security Works, “this year’s report notes that Social Security has an accumulated surplus of approximately $2.9 trillion. It projects that, even if Congress took no action whatsoever, there is sufficient revenue to pay for all benefits and associated administrative costs until 2034, and 79 percent of those costs thereafter. It once again shows that Social Security is fully affordable. At its most expensive, in 2095, Social Security is projected to cost just 6.16 percent of gross domestic product.”
In a statement, Nancy Altman, President of Social Security Works and the Chair of the Strengthen Social Security Coalition, called the current Social Security program “fully affordable,” urging that it be expanded. “Poll after poll shows that the American people overwhelmingly support expanding the program’s benefits. Increasingly, political leaders are listening,” she said.
Altman says since 2015 over a dozen Social Security expansion bills have been introduced in both chambers of Congress. The Social Security 2100 Act, introduced by Rep. John Larson (D-CT), has 170 House cosponsors – about 90 percent of all Democratic lawmakers. Similarly, around 90 percent of Senate Democrats are on record in favor of expanding, not cutting, Social Security.
“Social Security is a solution to our looming retirement income crisis, the increasing economic squeeze on middle-class families, and the perilous and growing income and wealth inequality. In light of these challenges and Social Security’s important role in addressing them, the right question is not how can we afford to expand Social Security, but, rather, how can we afford not to expand it,” says Altman.
Adds Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, the released Annual Trustees Report “confirms that the program’s trust fund is still very much intact, with $2.89 trillion in assets – or $44 billion more than last year.”
Calling on Congress for Social Security Fix
“The Trustees have confirmed that Congress has ample time (16 years) to enact modest and manageable changes to Social Security to address the fiscal shortfall,” says Richtman, noting that most Americans support the strengthening of the entitlement program by raising of the payroll wage cap. “It is the easiest and most effective way to strengthen Social Security’s finances, negating the need for harmful benefit cuts like means testing or raising the retirement age,” he says.
Other highlights of the Trustees Report include:
- Total income, including interest, to the combined OASDI Trust Funds amounted to $997 billion in 2017. ($874 billion from net payroll tax contributions, $38 billion from taxation of benefits, and $85 billion in interest)
- Total expenditures from the combined OASDI Trust Funds amounted to more than $952 billion in 2017.
- Social Security paid benefits of more than $941 billion in calendar year 2017. There were about 62 million beneficiaries at the end of the calendar year.
- The projected actuarial deficit over the 75-year long-range period is 2.84 percent of taxable payroll – slightly larger than the 2.83 percent projected in last year’s report.
- During 2017, an estimated 174 million people had earnings covered by Social Security and paid payroll taxes.
- The cost of $6.5 billion to administer the Social Security program in 2017 was a very low 0.7 percent of total expenditures.
- The combined Trust Fund asset reserves earned interest at an effective annual rate of 3.0 percent in 2017.