Without entitlement reform legislation in Congress, Social Security’s two trust funds will be insolvent in 20 years, according to a report issued Friday by the program’s trustees.
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The timetable for insolvency is the same from a year ago.
“When considered on a combined basis, Social Security’s retirement and disability programs have dedicated resources sufficient to cover benefits for the next 20 years,” Treasury Secretary Jack Lew said in prepared remarks.
“But as was true last year, it is projected that the combined Social Security Trust Funds will be exhausted in 2033, and incoming revenues will be insufficient to maintain payment of full benefits starting in that year,” he added.
Lew is a member of Social Security’s board of trustees.
After 2033, Social Security will only be able to pay 75% of promised benefits to eligible participants, the report warned.
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The report concluded that the program’s retirement benefits trust fund won’t run out until 2035, but the funds for disability insurance will be depleted by 2016.
“Social Security’s Disability Insurance (DI) program faces the most immediate financing shortfall of any separate trust funds,” said Lew. “While legislation is needed to address all of Social Security’s financial imbalances, the need has become most immediate with respect to the program’s disability insurance component.”
Meanwhile, the same trustees report found that without reform the Medicare trust fund will be insolvent by 2026.
Politicians from opposing ends of the spectrum all seem to agree that long-term budget deficits will continue to soar without reforms to entitlement programs such as Social Security and Medicare. As the U.S. population ages the costs for those programs will continue to take up more and more of the government’s budget.
President Obama has proposed changing how inflation is measured as a way of reining in Social Security costs. The proposal would cut Social Security benefits for some seniors, a move strongly opposed by powerful senior-advocacy groups such as the AARP.
Other measures considered have included raising the eligibility age for obtaining Social Security benefits and scaling back benefits for the wealthiest Americans.
No single reform proposal has yet to gain traction, however.