How Secure Is Social Security?

Photo of Social Security cardsWe often write about Social Security, and for good reason: it faces financial challenges and needs attention soon. The recently passed Bipartisan Budget Act of 2015 made a number of changes to temporarily stave off insolvency for Social Security’s disability program, buying policymakers some time to agree on a long-term solution.

But we’re not out of the woods. Social Security remains on a financially unsustainable path.

Our newly released guide to Social Security’s Future provides an overview of Social Security’s problems and the options for fixing them.


A tale of two programs

Social Security benefits are paid from two trust funds. One, called Old-Age and Survivors Insurance, is for the retirement program. The other, aptly named Disability Insurance, is for the disability program.

Since 2010, the two funds have together paid out more each year than they’ve collected in tax revenues. The Disability Insurance trust fund was projected to face a financial shortfall at the end of 2016, with revenues covering only 81 percent of benefits paid.

The Bipartisan Budget Act of 2015 extends the life of the Disability Insurance trust fund by 6 years. A greater share of payroll taxes will go to the disability trust fund, pushing the fund’s depletion date to 2022.

The depletion date for the retirement fund remains the same: 2035.

Difficult, but doable, choices

For Social Security to keep paying full benefits as promised, something has to change. This comes as no surprise because Social Security’s actuaries have projected these financial challenges for years, and policymakers and experts have developed various policy options to address them.

Solving Social Security’s challenges in the long run calls for difficult—but doable—choices among a range of options for both the retirement and disability programs, such as

  • changing benefits and eligibility,
  • changing how benefits grow over time, and
  • raising revenues for Social Security.

Acting soon

In short, further action should be taken soon—ideally well before the disability trust fund is depleted. Prompt action means that changes could be phased in over time, giving younger people time to adjust their retirement plans and reducing the impact on those who now rely on Social Security for most of their income. It will be important for policymakers to take the steps necessary to achieve the desired balance between income adequacy and individual equity, while also moving toward longer-term program solvency.


Image | This entry was posted in Retirement Security, Worker and Family Assistance and tagged , , , , , , . Bookmark the permalink.