For many Americans, the financial future of the Social Security system is a cause for serious concern since they expect to rely on its regular payments to meet their income needs during retirement. Unless Congress takes decisive action to fill a growing funding gap, sizable benefit cuts will be automatically enacted over the next nine to 11 years.
This was the message on a webcast hosted Wednesday by the U.S. Academy of Actuaries, called to review the recently published 2024 Social Security and Medicare trustees report. The panel featured Stephen Goss, the chief actuary at the Social Security Administration, and his colleague Karen Glenn, deputy chief actuary.
There is ample fodder for concern in the latest report, according to the duo, especially with the main trust fund used to support the payment of retirement benefits set to run dry by 2033. There are also some potential points of optimism, they emphasized, but the central response should be one of worry — and one of eagerness to enact painful but inevitable policy changes.
By addressing the program sooner rather than later, the pain required either in the form of tax hikes, benefit cuts or other sacrifices will be lower. Unfortunately, Goss and Glenn said, history shows that Congress is likely to wait to act until insolvency and big benefit cuts are "imminent," and so Americans are likely facing nearly another decade of Social Security uncertainty.
When Will the Social Security Funds Go Bust?
The main retirement fund, the Old-Age and Survivors Insurance Trust Fund, will likely run dry in 2033, the actuaries pointed out, but the program's leaders could move to use funds in the disability insurance program to achieve two additional years of projected solvency.
That is, the combined "OASI+DI" program has a projected insolvency date of 2035. At that time, benefit cuts in the realm of 17% will be necessary, according to the report.
Goss pointed out that these dates tend to move each year, so they shouldn't be viewed as certainties. For example, the combined trust fund reserve depletion date has varied from 2033 to 2035 in reports over the past 13 years. It has swung even further, from 2029 to 2042, when including trustee reports published since the early 1990s.
The figure for projected benefit cuts has also moved significantly, depending on fluctuating economic conditions and other factors, the Social Security actuaries explained. So, while this year's report projects that 83% of scheduled benefits will be payable at trust fund reserve depletion, this amount was just 80% in the 2023 report.
Other data from the new report shows the asset reserves of the combined trust funds declined by $41 billion in 2023 to $2.788 trillion, while the total annual cost of the program is again projected to exceed total annual income in 2024 and remain higher throughout the 75-year projection period.
Total costs began to be higher than total income in 2021, the actuaries noted, while Social Security's cost has exceeded its non-interest income since 2010.
