a repost
What You Need To Know From The Latest Social Security Trustees Annual Report
The latest annual report from the trustees for Social Security and Medicare came out today. It provided some very good news on the health care front: the report extended Medicare’s solvency by four years from 2026 to 2030. This improved financial health can be attributed in part to the Affordable Care Act, which is helping to reduce costs.
Just a few years ago, before the Affordable Care Act was fully implemented, the trustees predicted that the Medicare trust fund would run out by 2016. Another reason to be thankful for the ACA.
On the Social Security front, some news reports are focusing on the financial shortfall that the program faces in the next 75 years. But it is both expected and manageable. Here are the four key takeaways, from a post by Center for American Progress experts Rebecca Vallas and Christian E. Weller:
1. Social Security can continue to pay all promised benefits for the next two decades. As was the case in last year’s report, the Trustees continue to estimate that Social Security will be able to pay all scheduled retirement, disability, and survivorship benefits through 2033. Social Security has two trust funds: one for the retirement and survivorship benefit programs, and one for the much smaller Disability Insurance (DI) program (although experts generally consider the two funds together due to the interrelated nature of Social Security’s programs). Individually, the Old Age and Survivors Insurance (OASI) trust fund is projected to deplete its reserves in 2035, and the DI trust fund will do so in 2016. After 2033, the Trustees project that Social Security income from payroll taxes will be sufficient to cover 77 percent of promised benefits after 2033, unless policymakers implement changes before then.
2. Social Security’s shortfall is modest. The Trustees project that the entire Social Security shortfall for the next 75 years will be about 1 percent of GDP, or 2.88 percent of taxable payroll. The bulk of this shortfall, 2.55 percent of payroll or 88.5 percent of the entire shortfall, is attributed to OASI. The Trustees have long projected both the OASI and DI shortfalls. While an aging population is frequently discussed as the driving factor, recent analysis by Monique Morrissey at the Economic Policy Institute finds that as much as half of the shortfall is attributable to rising inequality and wage growth that has lagged behind gains in productivity.
3. The fact that action will soon be needed to address Disability Insurance’s finances has long been expected. As with last year’s report, this year the Trustees continue to project that the DI trust fund will be exhausted in 2016—something that has been expected for nearly 20 years.
4. A routine step would ensure that Social Security can pay all benefits in full through 2033. Rebalancing—an adjustment in the share of payroll taxes allocated to each of the trust funds—has occurred in a bipartisan manner 11 times in the program’s history to account for demographic shifts or other changes. About half the time funds have been reallocated toward OASI, and about half the time toward DI.
BOTTOM LINE: The trustees for Social Security and Medicare brought the good news that Medicare’s financial health is better than expected. And the predictions it makes for Social Security are both expected and manageable–permitting our elected officials can take action to strengthen this program that is a bedrock of economic security for working Americans.
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