Social Security reform has been a hot-button issue for years, and although it hasn’t been in the news recently, it should be. According to Social Security’s 2017 Board of Trustees report, urgent measures are needed.
“Under the Trustees’ intermediate assumptions, Social Security’s total income is projected to exceed its total cost through 2021,” but then it will experience an accelerated decline. Beginning 2022, the total cost will exceed total income.
It’s too late for hand-wringing. A window “through 2021” gives our representatives in Washington four years to make the required changes before the costs begin to deplete the meager reserves.
Although Social Security is often spoken in terms of the entirety of its obligations, the Old-Age, Survivors, and Disability Insurance program (OASDI) consists of two parts: OASI (Old-Age and Survivors Insurance) and DI (Disability Insurance).
According to the report, DI is expected to run out of funds by 2028, where OASI is expected to last until 2035. Once their reserves are depleted, the income generated from payroll taxes will only meet roughly 93% and 75% of the scheduled benefits, respectively. Combined, they will only be able to meet 77% of the scheduled benefits beginning 2036.
Someone in Washington needs to find the courage to make the necessary changes before the entire system implodes.
“The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them.”
You can find some of the recommended solvency provisions here.