On May 6th, 2024, the Social Security Administration released the annual Social Security Trustees report. Social Security is made up of the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust funds. The report confirms that the status of the program is in decline and will require changes within the next ten years to continue paying promised benefits. Here is the current recommendation from the board of trustees sent to the President of the Senate and the Speaker of the House of Representatives:
Recommendation—”Based on the intermediate projections in the 2024 Trustees Report, the OASI Trust Fund reserves will fall below 20 percent of annual cost by the beginning of calendar year 2033 and will become depleted in 2033 in the absence of legislation to address this imbalance between scheduled benefits and revenue. Lawmakers need to take prompt action to strengthen the actuarial status of the OASI Trust Fund. Lawmakers could choose (1) to increase revenues to the OASI Trust Fund, (2) to reduce cost through modification of the OASI program benefit levels or eligibility requirements, or (3) to use a combination of methods to strengthen the financial condition of the OASI Trust Fund. Such actions could apply only to the OASI program benefits and revenue or might have effects also on the DI program. The Board recommends that lawmakers enact timely legislation to make necessary adjustments for the OASI program.”
Prompt action is recommended to shore up the trust fund requiring Social Security taxes to be increased, benefits cut, or some combination of the two. Without a change, the OASI trust fund is expected to be depleted in 2033 and only about 79% of scheduled benefits would be payable. This could be a significant issue for the many retirees who rely on Social Security income. Fortunately, many potential changes have been proposed and studied thoroughly: https://www.ssa.gov/OACT/solvency/provisions/
The combination of solutions implemented will likely depend upon what is most advantageous for Congress politically at the time they decide to act on this well-known issue. With each passing year they ensure that more significant changes will be required to repair Social Security. While we expect a sensible solution to arise, the current situation demonstrates the importance of ensuring you are properly accumulating your own personal retirement savings.
