Social Security's Future Finances

The Office of the Chief Actuary of Social Security makes projections about Social Security finances that are used by the Board of Trustees in their annual report to Congress. The report uses assumptions about population growth—including births, deaths, and net immigration—and the performance of the economy with regard to wages, prices, productivity, and unemployment. These projections are educated guesses about an unpredictable future. The Trustees offer three scenarios: high cost, low cost, and intermediate or "best estimate." According to the 2012 “best estimate,” assuming no changes are made in law:

• In 2021, spending for benefits would exceed revenues plus interest on the securities. The funds would begin redeeming the Treasury securities. The cash to redeem the bonds may come from several sources: increased taxes, reductions in other federal government spending, or borrowing through the public sale of Treasury securities. If the money is borrowed, it will increase the federal budget deficit.
• In 2033, the trust fund assets would be exhausted. All the Treasury securities would have been redeemed. Taxes coming in from workers and employers would be sufficient to pay 75 percent of the benefits promised under current law.
• By 2086, the end of the 75-year projection period, incoming taxes would pay about 73 percent of scheduled benefits.

Under the high-cost scenario, the trust funds would be depleted in 2029 instead of 2036. Under the low-cost scenario, Social Security would be solvent for 75 years and beyond. The difference among estimates shows the great uncertainty about the long-term future.

For more information on Social Security finances, see:

• Social Security Finances: Findings of the 2012 Trustees Report, Social Security Brief No. 39
• Social Security Benefits, Finances, and Policy Options: A Primer
• Strengthening Social Security for the Long Run, Social Security Brief No. 35
• Why Do We Have a Social Security Trustees Report? What Should We Make of It? April 1, 2005 Policy Seminar
• Social Security: An Essential Asset and Insurance Protection for All
• Children's Stake in Social Security, Social Security Brief No. 27
• Building on Social Security's Success, A Briefing Paper
• Social Security and Retirement Income Adequacy, Social Security Brief No. 25
• Survivor Benefits for Families of Deceased Servicemembers and Overseas Contract Workers, Social Security Brief No. 23
• Can We Afford Social Security When Baby Boomers Retire?, Social Security Brief No. 22
• The Role of the Chief Actuary of Social Security, Social Security Brief No.17
• Options to Balance Social Security Funds Over the Next 75 Years, Social Security Brief No. 18

Read what some NASI members think:*

• Walter Shur: "Yes Virginia. There Is A Trust Fund" (8/7/05)
• Malvin Schechter: "Multigenerational Grand Larceny" (4/13/2005)
• Jon Forman: "The right tax to pay for Social Security" (3/30/05)
• William J. Arnone: "Language and Labels" (1/11/05)

* The views of NASI members are their own and not an official position of the National Academy of Social Insurance or its funders.