For many years the Trustees have been warning about the fiscal condition of the program. For just as long politicians have failed to act. Even more disturbing groups purporting to be advocates for seniors have mislead about the status of Social Security, some claiming there is a “surplus” or plenty of money to expand benefits. Neither are true.
Now we are faced with an economic crisis that well may accelerate depletion of the Trust.
Millions of Americans depend on Social Security for their financial wellbeing. Social Security’s finances, in turn, depend largely on the strength of the economy. Recessions cut the program’s revenues and raise its costs. Social Security’s board of trustees released its 2020 annual report on the programs’ finances today, but the economic fallout from COVID-19 has become apparent too recently to be incorporated into the board’s estimates. In this blog’s preliminary analysis and a more detailed report to be released soon, we fill that gap by providing illustrative estimates of the expected economic downturn on Social Security’s finances. Our preliminary analysis finds that the Disability Insurance (DI) trust fund’s reserves may be depleted during the next presidential term, and the Old-Age and Survivors Insurance (OASI) trust fund’s reserves may be depleted right around the time of the 2028 presidential election. These projections reflect a substantial further deterioration in the finances of a program that was already facing a large mismatch between income and outlays, making the need for action by policymakers even more urgent.