US Social Security Trustees Confirm Funding Crisis
04 June 2013
Posted by: Author: Mike Godfrey
Author: Mike Godfrey
Introducing the 2013 Social Security Report on the viability of the United States' retirement and disability programs, their Trustees confirmed that the funds are projected to be exhausted in 2033, at which point annual revenues from the dedicated payroll tax will be sufficient to fund only three-quarters of scheduled benefits for the period until 2087.
The Trustees' summary on the state of Social Security was that it cannot "sustain projected long-run programs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers."
"If lawmakers take action sooner rather than later," it was added, "more options and more time will be available to phase in changes so that the public has adequate time to prepare. Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits."
During 2012, an estimated 161m people had earnings covered by Social Security and paid payroll taxes, while Social Security paid benefits of USD775bn in 2012. There were about 57m beneficiaries at the end of the calendar year.
Last year, Social Security's cost continued to exceed both the programme's tax income and its non-interest income. It is projected that the programs' cost excesses will persist throughout the long-range period, and the amount of the overall trust funds is expected to decline until their assets are exhausted in 2033.
"The Social Security trust funds' projected depletion dates have not changed, and three-fourths of benefits would still be payable after depletion. But the fact remains that Congress needs to act to ensure the long-term solvency of this vital program," concluded Carolyn W. Colvin, Acting Commissioner of Social Security.
The point that Social Security will not be able to pay full benefits in 2033 was picked up by the Chairman of the House of Representatives Ways and Means Committee Dave Camp (R – Michigan), and its Social Security Subcommittee Chairman Sam Johnson (R – Texas).
"These programs face great challenges, and addressing these challenges requires that we work together," said Camp. "This Committee has been examining bipartisan reforms to protect and preserve these programs. It is our responsibility to make sure Social Security provides current seniors and future beneficiaries the security they earned and deserve."
"This report makes it clear, when today's 47-year-old workers reach their full retirement age in 2033, they, and everyone else already receiving benefits, face a 23 percent benefit cut unless Congress does its job," Johnson added. "The sooner we act the sooner we can protect those who are most vulnerable and find answers that are fair to all generations."