Social Security is fully funded for the next 15 years, and it’s mostly covered for the next 25 and 50 years too, according to the program’s trustees report released on Wednesday.
The Social Security Board of Trustees issue a report every year on the financial health of the program’s two trust funds that support benefits to retired, survivor and disabled beneficiaries. Last year, the trustees expected the reserves in those two funds would run out by 2035, a one-year delay from the year before. The report on Wednesday shows that expectation remains the same. (Social Security is supported by two trust funds — when they run out of money, the program will rely mainly on revenue from payroll taxes).
The program will be 91% funded for the next 25 years, 85% funded for the next 50 years and 82% funded for the next 75 years, according to the report. The figures are based on the two trust funds combined, although each is earmarked for specific purposes: one for the Old-Age & Survivors Insurance and one for Disability Insurance. Individually, the trustees project the reserves for OASI funds will be depleted in 2034 and the DI funds will be depleted in 2065.
Medicare’s trust fund for hospital care will be fully funded until 2026, an estimate that remains unchanged from the year before.
But there’s one major caveat in the 2020 report: it won’t account for the impact COVID-19 will have on the program.
In the near term, the agency has run business as usual. The coronavirus hasn’t deterred the Social Security Administration from sending out payments to current beneficiaries. The agency is still distributing benefits via direct deposit and mail during the pandemic, the Social Security Administration’s commissioner said in a statement earlier this year. Americans who claim Supplemental Security Income payments will also continue to receive their checks.
But the health crisis may negatively affect the program’s future stability. The long-term actuarial status of the trust funds depends on numerous factors, including fertility and mortality rates, immigration and disability, as well as the consumer-price index and wages. The coronavirus has the potential to jolt all of these factors.
The good news: Although COVID-19 may hurt Social Security, it won’t destroy it — the effects of the virus may not even make a huge dent in the projections. The estimate for the depletion of the trust funds may come sooner, but likely only by a year or so, said Nancy Altman, president of Social Security Works, which advocates for the expansion of the program. The shortfall in money needed versus had to pay out benefits might worsen, but only slightly, she added. “Even with what’s going on in the economy now, with such a large reserve the benefits will keep being paid and continued through the 2030s,” she said.
The trustees report gathers data over the last year, which means we won’t see the impact of the coronavirus on the program’s health until the report in 2021, said Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.
View trustee reports here: https://www.ssa.gov/OACT/TR/
By: Joyce Trudeau of Premier Disability Services, LLC®