The Social Security Old-Age and Survivors Insurance Trust Fund, which pays retirement benefits, could run out of reserves in 2033—one year earlier than last year’s estimate.
Still, the newly released 2023 Trustees Report says payroll tax revenue should cover about 77% of scheduled benefits in that year. The Disability Insurance Trust Fund remains financially stable throughout the trustees’ 75-year projection period, matching the conclusion from the 2022 report.
When combined, Social Security and disability funds may become unable to pay full benefits on time by 2034. At that point, tax revenue is expected to cover roughly 80% of scheduled payments. Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, warned that lawmakers missed earlier chances to strengthen the trust funds—especially during the 2011 debt-ceiling crisis.
“The big difference today is that these programs are much closer to insolvency,” Johnson told ThinkAdvisor. She added that failing to act could lead to reduced Social Security and Medicare benefits. “Lawmakers have delayed solutions for years,” Johnson said. “Now, we’re almost at the end of the road.”
More Views on the Report
Johnson also points out that this year’s report “is unexpectedly early. In many years, we often don’t see the report until summer. Thus, I suspect there have been requests from Congress and maybe from the White House to get the reports out early in order to provide material that can be discussed within the context of our debt limit debate.”
Many political leaders in Washington have promised not to touch Social Security or Medicare benefits as part of the debt limit agreement, but there may be “other sorts of negations going on,” she explains.
As Johnson recalls, during the debt-limit battle of 2011, Congress agreed to establish committees that took up Social Security and Medicare reforms. While no reform plan achieved a consensus, Congress could once again soon make the attempt.
“Lawmakers have a broad continuum of policy options that would close or reduce Social Security’s long-term financing shortfall,” the latest trustees report states. “The trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them.”
Implementing changes sooner rather than later would allow more generations to share in the needed revenue increases or reductions in scheduled benefits, according to the trustees, who say Social Security will play a critical role in the lives of 67 million beneficiaries and 180 million covered workers and their families during 2023.
Other Reactions
Nancy Altman, president of Social Security Works and chair of the Strengthen Social Security Coalition, stressed to ThinkAdvisor that policymakers and media commentators must view the 2023 Trustees Report in proper context—especially during ongoing debates in Washington over the national debt limit.
Altman highlighted two key takeaways from the report. First, Social Security still holds a large accumulated surplus. Second, the program remains highly affordable and will continue to be so throughout this century and beyond.
She noted that in about 75 years, Social Security will account for roughly 6% of the nation’s gross domestic product. That share is much lower than what countries like Germany, Austria, and France currently spend on similar programs.
Altman explained that Social Security keeps reserves to ensure uninterrupted benefit payments, regardless of economic or public health conditions. In fact, the program has never missed a payment in its 88-year history.
Over the coming months, Altman plans to challenge common misconceptions about Social Security.
She also emphasized that Social Security cannot increase the federal deficit. By law, it has no borrowing authority and cannot spend beyond its income. As a result, she argues that decisions about expanding or cutting benefits reflect values—not affordability.
According to Altman, proposals to strengthen Social Security have strong support from Democratic, Republican and independent voters. In contrast, the vast majority of voters oppose cutting benefits.
John Manganaro March 31, 2023 at 12:11 PM
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