NEW YORK (CBS NEWS) – Social Security’s board of trustees last week released its annual report on the long-term financial health of the system’s trust fund. And once again, the outlook is bleak. The trustees now project that the combined asset reserves for Old-Age and Survivors Insurance and Disability Insurance Trust Funds will be depleted in just 17 years.
These funds receive, hold and invest the Social Security taxes workers and employers pay. The funds are also used to make retirement, survivor and disability payments to approximately 61 million Americans.
In their report to Congress, the trustees said assets totaled approximately $2.85 trillion in 2016, an increase of $35 billion from the prior year. Although the funds are expected to grow for the next few years, beginning in 2022 the trustees foresee annual benefits paid out will exceed the Social Security taxes workers and employers pay. If Congress doesn’t act before 2034, trust fund assets will be depleted, and the taxes workers and employers pay would be enough to cover only about 77 percent of scheduled benefits.
The reason is demographics: a rapidly growing number of baby boomer retirees, increases in life expectancy and lower birth rates. When Social Security was first established in 1935, a retiree aged 65 would live to age 77 on average. Today, that 65-year-old will live to at least 85. In 1950, 16 workers paid Social Security taxes for every person collecting benefits. Today, that ratio has shrunk to 3.3 to one, and by 2034, it’s projected to be as little as two to one.