The news from the Social Security Trustees is slightly better than may have been expected. The Trustees oversee the trust funds that provide a significant portion of the operating funds for the retirement program (OASI) and the disability program (SSDI). They issue an annual report and for the last few decades, they have warned of the eventual exhaustion of the trust funds.
The current report finds that the retirement fund will be exhausted in 2034. This is unchanged from last year's report and has long been the date when the fund has been projected to run out of money.
For disabled workers who receive benefits from the SSD program, the report provided some better news in the near-term. The disability fund, which could have been exhausted this year, is now projected to remain solvent through 2023. The "fix" last year that Congress enacted, prevents what would have been a 20 percent cut to benefit payments.
The report is not great news, but it is not "doom and gloom." The overall program is not going "bankrupt" in the sense that many people understand the term. It will still be able to pay benefits, just not at the current level.
According to the Trustees, under the least optimistic economic projections and if Congress fails to act, the current financing of both the retirement and disability programs will still pay 74 percent of benefits after 2034. Using the most optimistic projection, with low unemployment and robust productivity, the fund escapes exhaustion through 2090.
Realistically, the bottom line is that Congress needs to act and to resolve this issue sooner, rather than later. However, given their track record, that hope may be even more optimistic than the most optimistic economic projection of the Trustee's report.
Source: Forbes.com, "The Truth About Social Security's Solvency And You," Chris Farrell, Next Avenue, June 24, 2016