Social Security Funded Until 2034, and About Three-Quarters Funded for the Long Term; Many Options to Address the Long-Term Shortfall
Reading Time: 3 MinutesLast Updated: June 22, 2016
The Social Security Board of Trustees today released its 76th annual report to Congress on the financial status of the Social Security trust funds. As a trustee of Social Security funds, I work with the other trustees to ensure the public is informed about the status of Social Security’s finances for the short term and over the next 75 years.
Workers earn their Social Security benefits by contributing through deductions from their paychecks. The Social Security trust funds include the Old Age and Survivors Insurance (OASI) fund, which pays benefits to retired workers and their families and to the families of deceased workers; and the Disability Insurance (DI) fund, which pays benefits to disabled workers and their families.
Today’s report shows that, as a whole, Social Security is fully funded until 2034, and after that it is about three-quarters financed. Considered alone, the DI Trust Fund is projected to become depleted sooner than the combined Social Security funds. I am pleased that legislation signed into law by President Obama last November averted a near-term shortfall in DI. With that small, temporary reallocation of the Social Security contribution rate, the DI fund will now be able to pay full benefits until 2023, and the retirement fund alone will be adequate into 2035. It is important that Congress act well before 2023 in order to strengthen the finances of the program as a whole.
Young people frequently ask: “Will Social Security be there for me?” I take this question very seriously, and I am sure Social Security will be there in the future. Its total cost is now about 5% of the national economy, or GDP. That will rise to about 6% when all of the baby boomers are retired. That increase, 1% of GDP, is less than the nation’s increase in spending for public education when baby boomers were children.
As President Obama recently said:
“Fewer and fewer people have pensions they can really count on, which is why Social Security is more important than ever. We can’t afford to weaken Social Security. We should be strengthening Social Security. Not only do we need to strengthen its long-term health, it’s time we finally made Social Security more generous, and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned.”
Like the President, I am confident we will rise to the challenge. Social Security is an earned benefit—a benefit that is critically important to the people who receive it. It is a foundation of economic security when workers and their families face what Franklin D. Roosevelt called “the hazards and vicissitudes of life.” It is the nation’s most effective poverty prevention program, keeping 21 million people out of poverty. So when we talk about Social Security financing, it’s not just a budget exercise – it’s our retirement system and our family economic security system, now and for the future.
Lawmakers have many policy options to address the shortfall: increasing contribution rates, lifting the cap on earnings subject to contributions, drawing on other revenue sources, lowering benefit amounts, or a combination of changes. Social Security’s independent actuaries have analyzed over 100 policy proposals from lawmakers on both sides of the aisle, and those results are available on the Actuary’s website. Lawmakers should act soon to address the long-term shortfall and preserve the reserves that yield interest income to help pay future benefits.
I am confident about the future of Social Security. We look forward to continuing to serve the American people by delivering the foundation of economic security that we know as Social Security
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Tags: Disability, retirement, Trustees Report
See CommentsAbout the Author
Carolyn Colvin, Acting Commissioner of Social Security
Acting Commissioner of Social Security (February 14, 2013 - January 20, 2017)
Comments
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D.H. F.
Note to OD: It’s incorrect to say that “you only get what you put in.” Social Security is not, and was never designed to be, a personal savings account. Millions of elderly women who were never in the workforce, paying in, were able to survive because they qualified for Social Security. Remember that Social Security was established in an era when Americans had very different priorities, and a sense of altruism.
Evie
If SS is a collective account to help everyone have monies to retire on, how does it determine what each contributor gets at time of retirement? If OD is correct in his research, then having a minimum paying job ( which most folks have today) is not going to help you with retirement. You are right in what SS was created for bc many widowed and sick folks that never or hardly contributed to the fund get SS. The adjustments that need to be made is in the increase in living expenses. The era of 1953-2016 shows a great abyss in what the dollar has turned into. Our American dollar is linked directly to government and the Federal Reserve, and their decisions.
Yes the money that was taken out of the fund should be returned but that will only help the future existence of the SS, not individual amounts. SS is part of a retirement plan, savings count for another part and pensions the last part. I don’t include investments like 401ks bc they have shown to be of little help to average Anericans who ( not educated with Wall Street) have gambled away must of their retirements.
There are a couple of things that can make retiring easier:
1. Prescription drugs must come down in price.
2. Increases in cost of living must match the power of the dollar.
3. The very wealthy should not receive SS.
4. No Senior should need a supplemental in the future. All contributions during a 35year working life should cover medical expenses.
5. Minimum wages should increase so that contributions can be greater in order to offset the affects of a lifetime of low paying jobs when retiring.
6. Once retired, there should be no increases in rent, insurances, nor medications for anyone on a FIXED INCOME.
Lastly, there should be a move forward for all of us to save our monies much more aggressively going forward. The idea of buying everything bc it’s “cheap” robs us all of our desire to enjoy a happy retirement.
Paul W.
Social Security was designed as a “supplemental” retirement income. That means you need savings to draw from in your retirement years, and SS supplements that.
Tax p.
Sorry Evie: What you are suggesting is discrimination just because people have money, so no they also deserve their money just like you and us.
Dee
Nicely put..
D.H. F.
We hear that Democrats have agreed to target the disabled yet again, possibly simply closing cases, cutting them off. We really need more information about this, but while media do keep people updated on retirement benefits, they tend to disregard disability benefits. Because this does present a potentially life-threatening situation, it would be nice to inform people about plans for Social Security Disability.
R.F.
Thank you for your comment. The Annual Trustees Report shows that, as a whole, Social Security is fully funded until 2034, and after that it is about three-quarters financed. Considered alone, the DI Trust Fund is projected to become depleted sooner than the combined Social Security funds. Legislation signed into law by President Obama last November averted a near-term shortfall in DI. With that small, temporary reallocation of the Social Security contribution rate, the DI fund will now be able to pay full benefits until 2023, and the retirement fund alone will be adequate into 2035. It is important that Congress act well before 2023 in order to strengthen the finances of the program as a whole. Social Security’s independent actuaries have analyzed over 100 policy proposals from lawmakers on both sides of the aisle, and those results are available on the Actuary’s website. Thanks !
James A.
What is being done to recover the 7.6 trillion dollars that Congress has literally illegally taken from our Social Security Fund?
R.F.
Hi James. Social Security is a pay-as-you-go system. Social Security taxes collected from today’s workers pay the benefits of today’s retirees. Any funds in excess of what is needed to pay today’s benefits are invested in special issue, U.S. Government, interest-bearing securities. This investment – the purchase of U.S. Government securities – is what constitutes the “borrowing” that people are sometimes concerned about. Any funds that have been “borrowed” from the Social Security Trust Funds have always been paid back in full, plus interest. Please check out our Trust Fund Frequently Asked Questions page for more information.
Tired
Yes james thats a good question. But all the questions are answered with the same answer. “Social Security is a pay as you go…blah blah blah.
OD
Everybody want to complain about social security,some people fail to realize, that you only get what you put in. If you had a minimum wage job all your life you will not receive much from social security. Also the formula they use is your highest 35 years no matter if you work more than 35 years. if you only work 25 years, then you will get 0 for the other 10 years. Until you understand how they compute social security you will be unhappy. They start with a formula sheet for everyone once you turn 62. They take your highest 35years no matter if you worked 50 years and you are capped at what ever year social security is capped. Example: if social security max in 1975 was 7800 dollars and you made 9000 that year you can only show 7800 because after 7800 they didn’t take out anymore social security taxes. Every year there is a cap like for 2016 the cap is $118,500 so if you made $400,000 SS is only going to take social security out of the cap amount which is $118,500 and the rest you do not pay social security tax on. So now lets just say some one born in 1953 made the max earnings his whole life, his social security check at full retirement monthly would be $2,630 using the work sheet. So, for those people who like to complain make sure you have all the facts first, I learned all of this thru research.
Evie
Thank you for sharing. Wondering if your research showed how a person could see how they did each of the 35years of working life? Also what are the benefits/or not of lifting the cap?
Thank you..,,
Dee
Wow, love your response..
Dee
Everyone is entitled to their opinion and I welcome that, this is diversity, we all need to vent, it helps each and everyone to understand each others dilemma with compassion.
R.F.
This is how we figure your Social Security retirement benefit: We base Social Security benefits on your lifetime earnings. We adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. If the individual does not have 35 years of earnings, we will use all of the earnings on the record. We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.” This is how much you would receive at your full retirement age — 65 or older, depending on your date of birth. For your convenience, we have a variety of calculators to help you plan for the future.
OD
everybody want to complain about social security some people fail to realize is that you only get what you put in if you had a minimum wage job all your life you will not receive much from social security and the formular they use is your highest 35 years no matter if you work more than 35 years and if you only work 25 then you will get 0 for the other 10 years until you understand how they compute social security you will e unhappy they start with a formular sheet for every one once you turn 62 and they take your highest 35years no matter if you worked 50 years and you are capped at what ever year social security is capped example if the max social security was in 1975 was 7800 dollars and you made 9000 that year you can show 7800 because after 7800 they didn’t take out social security taxes own you anymore and every year there is a cap like for 2016 he cap is 118500 so if you make 400000 they only going to take social security out of the cap amount the rest you do no pay social security tax on so if some one born in 1953 made the max earnings his whole life his social security at full retirement would be 2630 using the work sheet so for those people who like to complain make sure you have all the facts first i learned all of this from research
michelle s.
Has anyone here ever have SS tell you that the money you recieve is not to live off of? I’m 36 disabled/handicapoed with a terminal illness with several comorbilitys. My disease is progressive & debilitating… I am powerchair bound on some days to get to & from dr appts and the others hospital bed bound at home. I “earn to much for food stamps” & have been on a housing waiting list for years. I live check by check with my children & no help financially from anyone. I do have homecare services but have called SS and tell them how is this possible that with rent, utilities, food, and the other things that people use on a daily bases ie toilet paper, toothpaste, deoderant, laundry soap ect and then food that every time I turn around the price keeps going up. I really really try to keep it together for my 2 twelve year olds but I’m getting to that breaking point!!
john
see this : http://rahyabmoshaver.com/آدرس-دانشگاه-علمی-کاربردی-سمنان/
Marjory H.
Why not take the cap off wages and put a cap on the maximum social security payment someone can get?
R.F.
Thank you for your comment Marjory. The maximum benefit payment for someone retiring at his or her full retirement age in 2016 would be $2,639. To see a broad range of policy options that would address Trust Fund solvency and other issues related to Social Security benefits and financing visit the Actuary’s website. Thanks !
Salvatore R.
News article stated no funding available after 2016. Whose lying?
Laura R.
I wouldn’t believe that article.
Luis A.
Luis.alberto.barrantes@hotmail.com. Soy. Un ciudadano US.,Que percibo 320.lo como retiro se entiende se entiende que con esta cantidad no vive nadie, el problema es que mi sra.tiene un partimos de 15 22 horas ahora nos AN quitado una cantidad pequeña 111 dólares como suplementario y 89 a 92 DOLLARES que recibíamos de Children family nos AN quitado ambas cosas con el ingreso de mi SRA pagamos la vivienda 859.00 dólares los demás se paga seguro de carro 245.00 dólares gasolina ,45.00 dólares semanales hoy recibimos del gobierno estatal 16.00 yo digo por que no se regula los beneficios a los que se AN retirado con cantidades de de 320.00 a. 350.00 a. 1,000.00 incluyendo el suplementario esto beneficia a las personas de bajos ,en cambio los que se retiran de trabajo estatal con 10 años su retiro es mucho más alto y a veces el doble. ,yo señor comicios adolescentes que mi sugerencia es válida , me piden cada cierto tiempo los recibos de pago y no me resuelven nada,en la oficina de administración del seguro social deje el vierNew pasado y me quedaron en llamar el lunes pasado esto me lo dijo la supervisora miliar Maria mucho agradecería los gastos de comida AN subido y nosotros solo recibimos. 8.00 dólares cada uno mensual que se debe tomar en cuenta el gasto por comida mi SRA tiene 70 año y voy cumplir 82 años gracias por la atención a la presente.
Richard S.
Habla usted Ingles?
R.F.
For information in Spanish, please visit us at http://www.segurosocial.gov or http://www.facebook.com/segurosocial. For Social Security information in other languages, please visit us at http://www.socialsecurity.gov/multilanguage.
R.F.
For information in Spanish, please visit us at http://www.segurosocial.gov or http://www.facebook.com/segurosocial.
Tax p.
Que, que?
Tired
Speak english. Your in America. Recently a house in my neighborhood was put up for sale. Within a week 2 big suvs with blacked out windows pulled into the driveway. 8 young men got out and 3 men in suits. My neighbors,my wife and i were sitting on the porch drinking coffee when we noticed the plates on the vehicles had govt on them.
One neighbor decided to go over and see what was happening. He talked to one of the men in a suit. The rest had gone in the house. After a few mins he came back and was visibly upset. He told us the 8 men were syrian refugees. The govt bought the house for them!!
Since that day we also found out that each of those 8 men was recieving 5,000$ a month from SSA along with healthcare and food stamps!
If that is true and correct its an outrage. My wife and i barely make ends meet. How could these men receive any SSA when they are not entitled to receive anything from SSA when americans have worked their entire lives putting into it and we dont even get any where close to 5,000$ a month?.
R.F.
Under current law, refugees may be eligible for federally funded programs that make time-limited, needs-based assistance upon entry to the United States. States or local government can establish these assistance plans. Please be informed that the maximum Social Security benefit payment amount for a person retiring this year at the full retirement age of 66 would be $2,639. In 2016, the monthly maximum payment under the Supplemental Security Income (SSI) for an eligible individual is $733. For more information about the refugees assistance programs, please see our Program Operating Manual Section on Refugees. Thanks.
Joan C.
As someone who has worked for the State of Missouri for 16-1/2 years (will be 17 when I retire in December of this year), and someone who has not received a raise in over 10 years, cutting back on the COLA is not the answer. We’re already living in poverty! I’ve had to cut back, cut back, cut back. Going to be hard to cut back even more when food and rent costs keep on increasing but the Government thinks we don’t need a Cost of Living Increase. Whoever dipped their hands in the Soc. Sec. pot years ago ~ when it was set up so that doing that was ILLEGAL ~ should be made to make REPARATIONS WITH INTEREST! Yeah, that would be the Congress of the United States!
Laura R.
Yeah, my $24 COLA increases – when I get them – are so helpful. (But I’m not compaining!)
Dee
They have always been crooked, but they don’t think we know this, for years they have kept us in the dark…they panicked when they realized that all babyboomers were not going to wait until they were 70 yrs old to start drawing their benefits, so now they are fearful about the shortfall.