Social Security funds projected to deplete sooner

The Congressional Budget Office (CBO) has revised its forecast for the expected lifespan of Social Security funds. The Old-Age and Survivors Insurance (OASI) Trust Fund is now projected to be depleted by fiscal year 2034, while the Disability Insurance (DI) Trust Fund is expected to last until 2064. Molly Dahl, CBO’s chief of long-term analysis, testified before the budget committee that “starting in a decade, Social Security’s revenues will not be sufficient to cover all of the benefits that are due under current law.” This situation raises significant concerns for beneficiaries who rely on Social Security as a primary source of income after retirement. To address the projected shortfall, the CBO offers two primary solutions: a 35% increase in the Social Security payroll tax, raising it from 12.4% to 16.7% of taxable earnings, or a 24% reduction in benefits. Alternatively, a combination of tax increases, benefit reductions, or transfers from the general fund of the Treasury could be used to shore up the program’s finances. Economic and demographic uncertainties further complicate the long-term projections for Social Security. The CBO’s projections are grounded in a detailed microsimulation model that evaluates demographic and economic outcomes over a 75-year horizon. Earlier this year, the Social Security Administration (SSA)’s board of trustees predicted that the OASI Trust Fund would last until 2035, a year longer than CBO’s projection.

Social Security’s financial future uncertain

This discrepancy highlights the ongoing debate and the need for legislative action to ensure the program’s long-term viability. Political disagreements have hampered efforts to reform Social Security. Recently proposed legislation to overhaul the program includes increasing monthly benefits and changing the inflation-calculation formula. However, these bills have stalled in Congress. Both presidential candidates in the upcoming election have pledged to preserve Social Security. The Republican candidate vows to “restore economic stability to ensure the long-term sustainability of Social Security” without providing specific policy details. Meanwhile, the Democratic candidate promises to protect Social Security, Medicare, and Medicaid by rejecting any efforts to privatize the program or cut benefits and proposes increasing taxes on wealthy Americans to bolster the trust fund. As the debate continues, it remains clear that substantive reform is essential to secure the future of Social Security for generations to come.