Each year, the Report of the Social Security Trustees updates projections about the future finances of Social Security’s two trust funds, the Old-Age and Survivors (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. The 2020 Social Security Trustees Report projects that revenues will be sufficient to pay all scheduled benefits until 2035 and three-quarters of scheduled benefits thereafter. The DI Trust Fund is now projected to cover scheduled benefits until 2065 (compared with 2052 in last year’s Trustees Report), and the OASI Trust Fund until 2034 (the same projection as last year’s report). On a combined OASDI basis, Social Security is fully funded until 2035 but faces a projected shortfall thereafter if Congress does not act before then.
The 2020 Trustees Report shows that Social Security income from payroll contributions, tax revenues, and interest on reserves exceeded outgo by $3 billion in 2019. Reserves, now roughly at $2.9 trillion, are projected to begin to be drawn down in 2021 to pay full scheduled benefits. After the projected depletion of the combined OASDI trust funds in 2035, Social Security contributions and tax revenues would continue to be received and would cover about 79 percent of scheduled benefits (and administrative costs, which are less than 1 percent of outgo). Timely revenue increases and/or benefit reductions could bring the program into long-term balance, preventing the projected shortfall.
Crucially, the 2020 Report does not take into consideration the effects of the COVID-19 pandemic on projected OASDI revenues and outlays. For this reason, next year’s report will be of great significance to the policymaking community.