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Social Security Trustees Project Trust Fund Shortfall by 2034

New forecast moves up date when benefits would be cut without action to shore up finances

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Social Security’s trust funds could run short of money in 2034 unless Congress makes moves to shore up the system’s finances, according to the latest projections from the trustees who oversee the funds.

The trustees’ 2023 annual report, issued March 31, moves up by a year the estimated date when the combined funds that pay out Social Security retirement, survivor and disability benefits to some 66 million people would deplete their cash reserves. If that happens, annual revenue into the program will be able to cover only 80 percent of benefits. 

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Revised economic expectations are a factor in the change, the report states, with the trustees anticipating lower growth and productivity in the coming decade, compared to last year’s forecast. That translates to slower expected growth in revenue from the payroll taxes that largely fund Social Security.

“More than three years after the start of the COVID-19 pandemic, the acute stage of the pandemic appears to be over, but the trustees expect there will be residual effects on the population and the economy for years to come,” the report says.

VIDEO: What’s the Future of Social Security?

By contrast, for the second straight year the trustees forecast a stronger financial footing for Medicare. They estimate the program’s main trust fund, covering hospital insurance, will be able to pay full benefits through 2031, three years longer than projected last year.

“Today’s Social Security and Medicare trustees’ reports reinforce that while they are financially strong today, both programs face long-term funding needs,” AARP Chief Executive Officer Jo Ann Jenkins said in a statement. “Congress must act to find solutions to ensure Social Security and Medicare will be there for the next generation and into the future.”

Social Security reserves dwindling

The yearly report projects Social Security’s fiscal health over a 75-year span, based on economic and actuarial trends that affect how much the system collects in tax revenue and how much it pays out, to how many people and for how long.

Social Security is primarily funded by payroll taxes paid by most U.S. workers. At the end of 2022, the system had a $2.83 trillion surplus, according to the report, built up over decades of incoming revenue exceeding outgoing benefit payments.

But the fiscal balance has shifted in recent years, with the ranks of retirees growing faster than the working population and beneficiaries living longer. To cover benefits, Social Security has begun dipping into the trust fund surplus and will exhaust it in 11 years, according to the new report.

That doesn’t mean benefit payments would stop, but they would be funded only by each year’s tax revenue. The trustees estimate that would cover about 80 percent of scheduled benefit payments.

The Congressional Budget Office, which also tracks Social Security’s long-term fiscal health, estimated in a December 2022 report that the program would be able to fully cover scheduled benefits only through 2033.


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Less time for retirement, survivor benefits

The 2034 depletion date reflects a combined analysis of Social Security’s two trust funds: Old-Age and Survivors Insurance (OASI), which pays out retirement and survivor benefits, and Disability Insurance (DI), which covers disability benefits.

Taken separately, the OASI fund would be able to cover scheduled benefits in full until 2033, after which payments would be 23 percent less, based on current projections. The trustees forecast that disability benefits will remain intact through at least 2097, covering the full 75-year scope of the report.

To avoid any shortfall, Congress would have to take steps over the next decade to address Social Security’s finances — for example, by cutting benefits, raising taxes, redirecting other government revenue into the program or crafting some combination of the above. 

President Biden and Republican leaders in Congress have agreed to take Social Security and Medicare cuts off the table in negotiations over raising the nation’s debt ceiling.

“This is a promising time when leaders from both parties have committed to protecting these vital programs. It will take hard work to find bipartisan agreement, but today’s report shows how essential it is that leaders in Washington come together for the good of the country,” Jenkins says. “Congress must take its responsibility to protect Social Security and Medicare seriously, by developing a comprehensive plan and doing so in a way that is accountable and fully transparent to the American public.” 

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