Social Security trust funds projected to be depleted in 2034

The Social Security Board of Trustees said Friday that the combined asset reserves of the Old-Age and Survivors Insurance and the Disability Insurance Trust Funds are projected to be depleted in 2034, one year earlier than projected last year, with 80% of benefits payable at that time. 

In its annual report to Congress on the financial status of the Social Security Trust Funds, the Social Security Board of Trustees said that the Old-Age and Survivors Insurance Trust Fund is projected to be depleted in 2033, one year sooner than last year’s estimate, with 77% of benefits payable at that time. 

The DI Trust Fund asset reserves are not projected to become depleted during the 75-year projection period, according to the release.

According to the report, the asset reserves of the combined OASI and DI Trust Funds declined by $22 billion in 2022, to a total of $2.83 trillion. The total annual cost of the program is projected to exceed total annual income in 2023 and remain higher throughout the 75-year projection period. 

Social Security has never missed a payment since the first monthly check was sent to Ida May Fuller in 1940.

The Board of Trustees currently includes Janet Yellen, Secretary of the Treasury and managing trustee, Kilolo Kijakazi, acting commissioner of Social Security, Xavier Becerra, Secretary of Health and Human Services, and Julie Su, Acting Secretary of Labor. 

Kijakazi said in a statement that the trustees should continue to recommend that Congress address the projected trust fund shortfalls in “a timely fashion to phase in necessary changes gradually.”

“Social Security will continue to play a critical role in the lives of 67 million beneficiaries and 180 million workers and their families during 2023," Kijakazi said. "With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations.”

Jason Fichtner, vice president and chief economist at the Bipartisan Policy Center, said it was not a surprise that Social Security is on an “unsustainable financial path.”

“It is particularly alarming that the Trustees now expect the old-age and survivors insurance trust fund to run dry in 2033, one year earlier than last year’s projection. At that time, benefits for all recipients will be reduced by nearly 25%," Fichtner said in a statement. "Policymakers who are vowing never to touch the program or proposing purely partisan solutions are putting their heads in the sand and steering us toward the cliff.”

Meanwhile, AARP CEO Jo Ann Jenkins issued a statement saying the trustees report reinforces the need for Congress to find solutions to ensure Social Security and Medicare will be there for the next generation and into the future.

“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,” said Jenkins, adding that AARP will be “vigilant” in assessing how any proposals will impact older Americans.

The report showed total income, including interest, of the combined OASI and DI trust funds amounted to $1.222 trillion in 2022, while total expenditures from the combined funds amounted to $1.244 trillion.

Social Security paid benefits of $1.232 trillion in calendar year 2022 to about 66 million beneficiaries, according to the report. Meanwhile, an estimated 181 million people paid payroll taxes last year on earnings covered by Social Security.

It cost $6.7 billion to administer the Social Security program in 2022, or 0.5% of total expenditures. The combined trust fund asset reserves earned interest at an effective annual rate of 2.4% in 2022, the report said.