Social Security Retirement Fund Gets 1 Year Reprieve
Category: Social Security
June 6, 2022 — Social Security Trust Funds are now projected to last one year longer, as outlined in the latest Trustees Report. High employment rates and lower disability claims, it seems, have increased contributions to the retirement fund (OASI).
Thanks to those, instead of the retirement trust fund (OASI) becoming exhausted in 2033, that event has been pushed back to 2034. The disability (DI) fund is now expected to last at least for 75 years, up from 2057. At this time, there is no consensus among experts on the lasting effects of the COVID-19 pandemic. The Trustees currently assume that the pandemic will have no net effect on their long-range projections. The assumptions for their report were determined in mid-February 2022, and they are uncertain regarding the path of the COVID-19 pandemic and the economy in the near-term.
Based on their best estimates, the 2022 reports determine:
• The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, will be able to pay scheduled benefits on a timely basis until 2034, one year later than reported last year. At that time, the fund’s reserves will become depleted and continuing tax income will be sufficient to pay 77 percent of scheduled benefits.
• The Disability Insurance (DI) Trust Fund, which pays disability benefits, is no longer projected to be depleted within the 75-year projection period. By comparison, last year’s report projected that it would be able to pay scheduled benefits only until 2057.
• The Hospital Insurance (HI) Trust Fund, or Medicare Part A, which helps pay for services such as inpatient hospital care, will be able to pay scheduled benefits until 2028, two years later than reported last year. At that time, the fund’s reserves will become depleted and continuing total program income will be sufficient to pay 90 percent of total scheduled benefits.
• The Supplemental Medical Insurance (SMI) Trust Fund is adequately financed into the indefinite future because current law provides financing from general revenues and beneficiary premiums each year to meet the next year’s expected costs. Due to these funding provisions and the rapid growth of its costs, SMI will place steadily increasing demands on both taxpayers and beneficiaries.
Bottom line
The Trustees included their customary warnings to Congress about the impending shortfalls, which traditionally fall on deaf ears. Social Security is the third rail for politicians, and it is the rare one who has the courage to tackle it. As the Trustees point out, the earlier the problem is fixed the less bitter the medicine will be. Our suggestion is to ask any political candidate for national office what their position is on fixing Social Security, and see what they say (and they do).
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Comments on "Social Security Retirement Fund Gets 1 Year Reprieve"
C Jordon says:
The Social Security Fund would be solvent if the Federal Government would STOP pilfering the fund. The funds have been paid for by workers in this country and employers who collect the FICA tax.
It should also be mandatory for all multi- millionaires to pay their fair share into the SS fund - amounts in arrears to the present. The super rich should also pay federal income tax based on their wealth - period. The middle class & poor should not have to bear this burden while the rich get away with not contributing their fair share.
Marilyn says:
How will seniors survive if Social Security ends in 2034 and Medicare Part A pays 90%?
John Brady says:
Responding to comments above, I agree with you on some points and have to disagree with others. Thanks for commenting on these important issues.
Regarding the government pilfering the Social Security funds, it is NOT. That story circulates on the Internet, but is not true. Actually the money is not only all there, but SS has been paying it out as current contributions are not adequate to pay all obligations in recent years.
I agree that wealthy people should have no limitation on how much of their earnings are taxed for FICA. Since benefits are graduated and tilted toward lower earners, wealthy people will be paying MORE than their fair share, but that's OK, they should consider it an additional tax for the benefit of living in a country with the opportunity to get rich.
Regarding SS ending in 2034, it won't. But if nothing is done, only about 75% of promised benefits will be paid. The government is currently obligated to pay for Medicare Part A, I haven't seen anything about changing that.
Clyde says:
It’s fairly unlikely that Social Security payments will be reduced by 75% or any other amount in 2034. That’s because SS recipients will not politically stand for it. If Congress doesn’t fix the issue by then and payments were to be cut, those members who refused to vote to fix it understand they’d almost certainly be voted out of office by the tens of millions of voters who would be negatively affected by such cuts. The fix is relatively easy, but as our Admin suggested, it will require that the wealthy pay more into SS during their working years. A caveat: my thoughts are based on our governmental system remaining a democracy until then. If we move toward a more authoritarian form of government, then all bets are off regarding Social Security being preserved as it is.
Trapper says:
There is a way to.solve both social security and Medicare funds from running out. Many people will have many misgivings about it, but let’s put it this way . . . Just because you can extend life doesn’t mean you should.
Life extending surgery, chemotherapy, kidney replacement, and other procedures that extend a life for a short time cost Medicare and forces social security payments to extend well past a body’s normal exit time.
I have faced and am facing a sibling (age 66) with stage 4 lung cancer. This comes with no surprise as her lifetime has been one cigarette after another. Should we try to help her If she broke a leg, I’d say fix it. That’s a quality of life issue. Extend her life using chemo or other measures- I’d say no. She knew she was digging her own grave.
So life extension measures - no Quality of life -absolutely yes!
Jennifer says:
Trapper- As a former nurse, I can tell you that many people who do not smoke can and do get lung cancer. The choice on whether to treat or not to treat should be that of the patient and/or their family and not of a health care policy or system. There are so many contributing factors in a disease process that have to be considered. I have met people who wished to terminate their lives due to the pain and side effects of treatment for cancer. I would hope that a healthcare system does not pressure one who is ill to that end. Quality of life is definitely a huge consideration. I try to see both sides of the issue (Libra here).
Daryl says:
Maybe concentrate instead on curtailing Medicare fraud and the ridiculous cost of medical care and drugs in this country. I don’t want anyone who referred to retirees as “useless eaters” and jokingly termed Covid the “Boomer Remover” to decide whether I deserved my illness or when my quality of life threshold has been reached.
JCarol says:
Thank you, Jennifer, thank you for sharing your wisdom and experience. Deciding who to treat and who not to treat based on a judgment of levels of personal responsibility for a medical condition would be a very slippery slope.
As for SS, Congress rarely acts before the 11th hour. Legislation to shore up SS will probably be the same.
Should lawmakers breathe hints of cutting SS benefits to those already receiving them, constituent response will be fierce, immediate and deeply punishing. They'd awaken SS recipients plus a large swath of younger voters who'd (rightly) fear that their own finances would be at risk.
How many young people's budgets can stretch to partially support parents, grands and other loved ones whose (worked for, promised and counted on) SS benefits get slashed?
Mike says:
June 9 a Senate bill was introduced that the Social Security chief actuary said would pay full benefits for 75 years but Sen. Romney(R) of Utah said: ““This bill has no chance whatsoever of receiving a single Republican vote in either House. So it will not be passed.” A similar bill in the House from last year has no Republican backers despite a majority of Americans of both parties supportive of the changes.
How many people have contacted their representatives about supporting those bills or even aware they were introduced or asked their representatives to come up with an alternative plan? Unfortunately American’s short attention span is often diverted to culture wars that keep us from addressing serious issues. By delaying action the problem gets bigger and harder to solve and I think that is by design.
For years the record shows Americans have voted against their own self interest and keep electing politicians that don’t have their constituents best interests at heart. https://retiredamericans.org/voting-record/
Many politicians aren’t concerned with what the voters want and get to keep their jobs anyway. If voters won’t vote out politicians now who won’t address the problem why would they in 10 years? The reason for policy decisions are here: https://www.opensecrets.org/industries/alphalist.php Pick your industry and read the totals section. Look into the revolving door between business and government where industry insiders work a few years setting government policy and then return to the private sector to reap the benefits of those policies.
As for young voters most I know have drunk the Kool-Aid that Social Security is doomed and won’t be around when they are eligible to collect, the non stop propaganda about SS being unsustainable has had its desired effect.
After studying nearly 1,779 issues a Princeton study concluded:
“ that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no
independent influence.”
“The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.”
“When a majority of citizens disagrees with economic elites or with organized interests, they generally lose. Moreover, because of the strong status quo bias built into the U.S. political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.”
“…our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts.”
“But we believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened.”
Gilens & Page, Perspectives in Politics https://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf
Jennifer says:
JCarol,
We also have to consider the many Seniors and disabled who have no living family to rely on for any type of support. What can they do? We need to include high earners in the process and the taxes generated would greatly help to keep social security solvent, At this point, I have to agree, that Congress will wait until the final hour to act. I see all the money going to non-citizens and across the globe, perhaps more of it should be used on those American citizens and Seniors who are in need in our own country.
Ron says:
Social Security must be funded into perpetuity! Our bloated and wasteful military spending can easily be gutted to cover any shortfall! Also easily remove the top earning cap so multi millionaires and billionaires
Pay so SUPPORT this needed benefit.
Jennifer says:
I do believe that improvements will happen as the younger generations will want this benefit too. They may expand the benefits and make it even better. When I was 27, I thought Social Security would not be here for me....however, it is here and I do receive the benefits. We no longer have a pension type of retirement system and so the benefits must be adjusted to accommodate that--there is NO three-legged system for most of the current retirees and will be less for those in the future. Those who are fortunate to have a pension know it for the dinosaur it has become. The future holds many possibilities as the younger generations age and see that we either uphold the current system in some manner or let it go. I do not think they will do that.