Bad News: Social Security Going into Red One Year
Sooner; Good News: Part of Problem is We Live Longer
Social Security Trustees issue annual report on
financial health of trust funds; feeling impact of economic downturn
May
12, 2009 If there was a surprise in the annual report on the financial
health of the Social Security Trust Funds by the Social Security Board
of Trustees, it was that the economic downturn has only moved the date
that costs will exceed tax revenues forward by one year. This is now
projected to happen in 2016. The good news is that one reason for the
shrinking window is that Americans continue to live longer than
expected.
The combined assets of the Old-Age and Survivors,
and Disability Insurance (OASDI) Trust Funds will be exhausted in 2037,
four years sooner than projected last year. The worsening of the
long-range outlook for the Social Security program is due primarily to
the recent economic downturn and faster reductions in mortality than
previously assumed, the report says.
In the 2009 Annual Report to Congress, the Trustees
announced:
● The projected point at which tax revenues will
fall below program costs comes in 2016 -- one year sooner than the
estimate in last years report.
● The projected point at which the Trust Funds
will be exhausted comes in 2037 -- four years sooner than the estimate
in last years report.
● The projected actuarial deficit over the
75-year long-range period is 2.00 percent of taxable payroll -- up from
1.70 percent in last years report.
● Over the 75-year period, the Trust Funds would
require additional revenue equivalent to $5.3 trillion in todays
dollars to pay all scheduled benefits.
Todays Trustees Report contains some
disappointing, but not unexpected, news about the financial condition of
the Trust Funds, Commissioner Astrue said. We should be neither
casual nor hysterical about the revised insolvency dates. As with the
economy as a whole, the Social Security system will weather this
recession. However, the sooner we get on with the task of reforming the
system, the easier it will be to make the tough choices that we all know
we need to make.
Other
highlights of the Trustees Report include:
● Income including interest to the combined
Old-Age and Survivors, and Disability Insurance (OASDI) Trust Funds
amounted to $805 billion ($672 billion in net contributions, $17 billion
from taxation of benefits and $116 billion in interest) in 2008.
● Total expenditures from the combined OASDI
Trust Funds amounted to $625 billion in 2008.
● The assets of the combined OASDI Trust Funds
increased by about $180 billion in 2008 to a total of $2.4 trillion.
● During 2008, an estimated 162 million people
had earnings covered by Social Security and paid payroll taxes.
● Social Security paid benefits of $615 billion
in calendar year 2008. There were almost 51 million beneficiaries at
the end of the calendar year.
● The cost of $5.7 billion to administer the
program in 2008 was a very low 0.9 percent of total expenditures.
● The combined Trust Fund assets earned interest
at an effective annual rate of 5.1 percent in 2008.
The Board of Trustees is comprised of six members.
Four serve by virtue of their positions with the federal government:
Timothy F. Geithner, Secretary of the Treasury and Managing Trustee;
Michael J. Astrue, Commissioner of Social Security; Kathleen Sebelius,
Secretary of Health and Human Services; and Hilda L. Solis, Secretary of
Labor. The two public trustee positions are currently vacant.
May
12, 2009 If there was a surprise in the annual report on the financial
health of the Social Security Trust Funds by the Social Security Board
of Trustees, it was that the economic downturn has only moved the date
that costs will exceed tax revenues forward by one year. This is now
projected to happen in 2016. The good news is that one reason for the
shrinking window is that Americans continue to live longer than
expected.
Other
highlights of the Trustees Report include: