The combined trust funds for Social Security are projected to run out a year later than previously expected, a board of trustees of the program’s accounts said Monday.
In the latest report, trustees project the depletion date for the Old-Age and Survivors Insurance (OASI) Trust Fund, which pays out Social Security benefits to retirees, and the program’s smaller Disability Insurance (DI) Trust Fund will be 2035.
Biden administration officials said the projected depletion date for the OASI trust funds has moved to November 2033, seven months later than last year’s projection, partly due to economic growth.
On a call with reporters ahead of the release, an official said the trustees increased their assumed level of labor productivity and gross domestic product (GDP) in the coming years after economic growth exceeded expectations last year.
The official said trustees also reduced the assumed ultimate disabled worker incidence rate and revised the ultimate total fertility rate assumption from 2.0 children per woman to 1.9 — the lowest assumed by trustees in their reporting.
In turn, however, the official said lower disability rates and fertility rates contributed to higher age-specific employment rates and GDP.
While both trust funds are separate, they have been considered as a combined fund when discussing the program’s solvency, relying on interfund borrowing between accounts to temporarily extend solvency in the past.
Social Security Administration Commissioner Martin O’Malley lauded the projection as “a measure of good news for the millions of Americans who depend on Social Security,” while noting “any potential benefit reduction event has been pushed off from 2034 to 2035.”
But he also called on Congress to “take action” to extend the lifetime of the program.
“Eliminating the shortfall will bring peace of mind to Social Security’s 70 million-plus beneficiaries, the 180 million workers and their families who contribute to Social Security, and the entire nation,” he said.
Once the reserves of the OASI trust fund are depleted, the report projects that account income will only be able to cover 79 percent of scheduled benefits for recipients.
In a Monday statement, Jason Fichtner, chief economist for the Bipartisan Policy Center, marked “yet another year of inaction by lawmakers to protect this crucial program on which so many Americans depend.”
“Far from protecting beneficiaries, this posturing steers us toward automatic across-the-board benefit cuts of over 20 percent when the Old–Age and Survivors Insurance trust fund runs dry, which the Trustees expect to happen in 2033, less than 10 years from now,” Fichtner said, adding only “pragmatic, bipartisan policymaking can prevent these cuts.”