On March 31, the Social Security Board of Trustees published the annual report on the financial status of the Social Security Trust Fundswhich includes the Aging and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds.
Social Security reveals when funds will run out for benefit payments
According to the report, the combined asset reserves of both the OASI and DI funds will be depleted by 2034. If Congress does not act before that date, there will only be enough income to pay 80% of the scheduled benefits.
The DI Trust Fund of reserve assets is projected not to be depleted over the projected 75-year period.
On the other hand, the Aged and Survivors Insurance Trust Fund (OASI), that pays retirement and survivor benefits, you will be able to pay scheduled benefits in a timely manner through 2033 with 77% of benefits payable.
Social Security Trust Funds fell in 2022
The annual report states that combined OASI and DI Trust Fund asset reserve decreased by $22 billion in 2022for a total of $2,830 billion.
Besides, the total annual cost of the program is projected to exceed the total annual revenue this year. According to the trustees, Social Security costs have exceeded their non-interest income since 2010.
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In calendar year 2022, Social Security paid $1.232 billion in benefits to approximately 66 million beneficiaries. On the other hand, an estimated 181 million people had earnings covered by Social Security and paid payroll taxes.
What happens if Social Security funds run out?
Although the program will not run out of money completely, there would be a trust fund deficit, so retirees would receive lower Social Security payments, affecting millions. Social Security is estimated to provide at least half the income of 50% of older married couples and 70% of older singles.
Social Security is still a decade away from running out of money to pay full benefits; however, various options for changes have already been put forward to deal with the budget deficit. These options include:
- Increase the payroll tax rate
- Increase wages subject to Social Security taxes
- Raise the full retirement age
- Reduce annual cost-of-living adjustments (COLAs)
