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Social Security Funds Will Last Until 2034: CBO

News August 28, 2024 at 04:39 PM
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The main trust funds used to support payments of Social Security retirement benefits are set to run dry in 2034, according to the latest annual funding report published by the Congressional Budget Office.

That is one year later than the projection published last year, and it is roughly in line with what the Social Security trustees indicated in their own projections published back in May.

Key Solvency Facts

In the new report, the CBO details its 75-year projections for the Social Security program.

If Social Security's outlays were limited to the amounts that could be paid from annual revenues after the combined balance of the retirement and disability trust funds were exhausted in fiscal year 2034, benefits would be about 23% smaller than scheduled benefits in 2035, CBO projects.

Payable benefits, in turn, would be about 28% smaller than scheduled benefits in 2098.

CBO projects that if Social Security paid benefits as scheduled, spending on the program would increase from 5.1% of gross domestic product in 2024 to 6.7% in 2098. That increase is attributed to the growing share of the population age 65 or older.

The program's revenues would remain near 4.5% of GDP during that 75-year period, according to the report. After 2098, the gap between revenues and outlays as a percentage of GDP would widen, and shortfalls would continue to grow.

Taken individually, the balance of the Old-Age and Survivors Insurance Trust Fund is expected to be exhausted in fiscal year 2033, and the balance of the Disability Insurance Trust Fund would be exhausted in 2064.

More From the Report

Social Security's actuarial deficit over the next 75 years, a summary measure of the program's sustainability, is equal to 1.5% of GDP or 4.3% of taxable payroll — i.e., total earnings subject to the Social Security payroll tax.

Another dynamic highlighted in the report is the fact that average initial benefits are projected to increase over time in real terms — i.e., after adjustments to remove the effects of inflation.

"For people born from the 1950s to the 1990s, those initial benefits replace more than one-third of pre-retirement earnings for retired workers and more than half of average recent earnings for disabled workers," the report explains.

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