Social Security to dip into reserves starting in 2018, interest plus tax income no longer sufficient to pay benefits.

I have been telling you for years there is no Social Security surplus. Sen Sanders, groups such as Social Security Works and others have been misleading you.

The just released 2018 Trustees Report says this.

Under the Trustees’ intermediate assumptions, Social Security’s total cost is projected to exceed its total income in 2018 for the first time since 1982, and remain higher throughout the projection period. Social Security’s cost has exceeded its non-interest income since 2010. For 2018, cost for the program is projected to exceed total income by $2 billion and non-interest income by $85 billion. As a result, asset reserves will decline during 2018. Reserves are also projected to decline throughout the remainder of the short-range period.

The Trustees also say

To illustrate the magnitude of the 75-year actuarial deficit, consider that for the combined OASI and DI Trust Funds to remain fully solvent throughout the 75-year projection period: (1) revenues would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 2.78 percentage points to 15.18 percent, (2) scheduled benefits would have to be reduced by an amount equivalent to an immediate and permanent reduction of about 17 percent applied to all current and future beneficiaries, or about 21 percent if the reductions were applied only to those who become initially eligible for benefits in 2018 or later; or (3) some combination of these approaches would have to be adopted.


  1. .

    Is there a difference between “surplus” and “reserves” ?

    They appear to me to be the same same thing.




    1. Not the same thing at all. A surplus means you have more than you need. A reserve is what you put away to pay for an obligation that is created and must be paid. The reserve may or may not be adequate. In the case of SS it is not adequate. The liability created for current and future beneficiaries is in the trillions of dollars and at the moment there is no funding to pay those promises.


  2. I have said before the easiest way to fix the SS shortage is to raise the payroll tax each year by the same as the COLA. If the COLA in 2019 is 3% the tax would go up from 6.2 to 6.386. So, you would pay $63.96 per $1000 in income instead of the current $62 per $1000.
    These are small increases over many years, most people will not even notice the increase.
    If there is no COLA the tax does not go up. Do this until the tax is 10% for employee and employer, it would take 16 years at 3% inflation. This is needed because it is more in line with what employees receive in benefits and employers contribute more because many do not offer retirement plans today. Also, it will ensure the SS trust fund will grow and remain solvent for years to come.


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