By:Elisa A. Walker, Virginia P. Reno, and Thomas N. Bethell
Published: May, 2013
May 2013 ~ Social Security Brief No. 42
The 2013 Trustees Report updates projections about the future finances of Social Security’s two trust funds. The Disability Insurance (DI) trust fund, which is legally separate from the Old-Age and Survivors Insurance (OASI) trust fund, requires legislative action soon to ensure that all scheduled benefits for disabled workers and their families can be paid in 2016 and beyond. Of the 6.2 percent of earnings that workers and employers each pay into Social Security, 5.3 percent goes to the OASI trust fund and 0.9 percent goes to the DI trust fund. A temporary reallocation of that rate could strengthen DI while only slightly changing the trustees’ OASI financial forecast.
On a combined basis, Social Security is fully funded until 2033, but faces a long-term shortfall thereafter. In 2012, Social Security revenue plus interest income exceeded outgo by $54 billion, leaving a surplus. Reserves, now at $2.7 trillion, are projected to grow to $2.9 trillion by the end of 2020. Then, if Congress takes no action in the meantime, reserves would start to be drawn down to pay benefits. In the highly unlikely event that Congress does not act before 2033, the reserves would be depleted and revenue continuing to come into the trust funds from workers’ and employers’ contributions and taxation of benefits would cover about 77 percent of scheduled benefits (and administrative costs, which are less than 1 percent of outgo). Timely revenue increases and/or gradual benefit reductions can bring the program into balance over the long term. Download the full brief to read more.