The annual report on the long-term financial status of the Social Security trust funds released Wednesday projects that the combined asset reserves of the retirement, survivor and disability programs will be depleted in 2035 — unchanged from last year’s report. At that time, Social Security would be able to pay only 79% of projected benefits.
But the new report does not reflect the potential impact of the COVID-19 pandemic.
“Given the uncertainty associated with these impacts, the trustees believe it is not possible to adjust estimates accurately at this time,” Andrew Saul, commissioner of Social Security, said in a statement accompanying the annual report.
“The duration and severity of the pandemic will affect the estimates presented in this year’s report and the financial status of the program, particularly in the short term,” Saul said.
The trustees announced that the combined assets of the Old Age and Survivor Trust Fund and Disability Trust Fund increased by $2.5 billion in 2019 to a total of $2.87 trillion.
The OASI Trust Fund is projected to become depleted in 2034, the same as last year’s estimate, with 76% of benefits payable at that time. The DI trust fund is estimated to become depleted in 2065, extended 13 years from last year’s estimate of 2052, with 92% of benefits still payable.
Although Social Security’s annual costs have exceeded its annual income from payroll taxes since 2010, interest income on the remaining reserves has made up the difference. The latest trustees report projects that will change in 2021, when total annual costs of the programs will exceed total annual income — including interest — for the first time since 1982.
As a result of that trust funds crisis, Congress approved comprehensive Social Security reform in 1983. The new trustees report projects that trust fund reserves will decline during 2021 and continue to decline for the foreseeable future unless Congress steps in.
The total income, including interest, of the combined OASI and DI trust funds amounted to $1.062 trillion in 2019, including $944.5 billion from net payroll tax contributions, $36.5 billion from taxation of benefits and $81 billion in interest. Total expenses for the trust funds amounted to $1.059 trillion in 2019.
Social Security paid benefits totaling $1.049 trillion in 2019 to about 64 million beneficiaries.
During 2019, an estimated 178 million people had earned income covered by Social Security and paid payroll taxes. Since the pandemic began in early March, more than 22 million Americans have filed for unemployment benefits — resulting in a sizable drop in payroll tax collections — with no indication as to how long the economic shutdown and record unemployment levels will last.
In addition, many people are rethinking their timing for claiming Social Security, and some are claiming benefits earlier than they had planned, either because they lost their job and need the money or are concerned about withdrawing funds from their depressed investment accounts.