The Social Security Board of Trustees released its annual report this week on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and the Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to become depleted in 2034, one year earlier than projected last year, with 78% of benefits payable at that time.
The OASI Trust Fund is projected to become depleted in 2033, one year sooner than last year’s estimate, with 76% of benefits payable at that time. The DI Trust Fund is estimated to become depleted in 2057, eight years earlier than last year’s estimate, with 91% of benefits still payable.
In the 2021 Annual Report to Congress, the trustees announced:
- The asset reserves of the combined OASI and DI Trust Funds increased by $11 billion in 2020 to a total of $2.908 trillion.
- The total annual cost of the program is projected to exceed total annual income for the first time since 1982 in 2021 and remain higher throughout the 75-year projection period. As a result, asset reserves are expected to decline during 2021. Social Security’s cost has exceeded its non-interest income since 2010.
- The year when the combined trust fund reserves are projected to become depleted — if Congress does not act before then — is 2034, one year earlier than last year’s projection. At that time, there would be sufficient income coming in to pay 78% of scheduled benefits.
“The Trustees’ projections in this year’s report include the best estimates of the effects of the COVID-19 pandemic on the Social Security program,” said Kilolo Kijakazi, acting commissioner of Social Security. “The pandemic and its economic impact have had an effect on Social Security’s Trust Funds, and the future course of the pandemic is still uncertain. Yet, social security will continue to play a critical role in the lives of 65 million beneficiaries and 176 million workers and their families during 2021.”
Other highlights of the Trustees Report include:
- Total income, including interest, to the combined OASI and DI Trust Funds amounted to $1.118 trillion in 2020. ($1.001 trillion from net payroll tax contributions, $41 billion from taxation of benefits, and $76 billion in interest)
- Total expenditures from the combined OASI and DI Trust Funds amounted to $1.107 trillion in 2020.
- Social Security paid benefits of $1.096 trillion in calendar year 2020. There were about 65 million beneficiaries at the end of the calendar year.
- The projected actuarial deficit over the 75-year long-range period is 3.54% of taxable payroll – higher than the 3.21% projected in last year’s report.
- During 2020, an estimated 175 million people had earnings covered by Social Security and paid payroll taxes.
- The cost of $6.3 billion to administer the Social Security program in 2020 was a very low 0.6% of total expenditures.
- The combined Trust Fund asset reserves earned interest at an effective annual rate of 2.6% in 2020.
The board of trustees usually comprises six members. Four of them serve by virtue of their positions with the federal government: Janet Yellen, secretary of the treasury and managing trustee; Kilolo Kijakazi, acting commissioner of Social Security; Xavier Becerra, secretary of the U.S. Department of Health and Human Services; and Martin J. Walsh, secretary of labor. The two public trustee positions are currently vacant.
View the 2021 Trustees Report at www.socialsecurity.gov/OACT/TR/2021/.