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Backgrounder #2936 on Retirement Security

August 4, 2014

Social Security Trustees Report: Unfunded Liability Increased $1.1 Trillion and Projected Insolvency in 2033

By and

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[1] U.S. Social Security Administration, The 2014 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, July 28, 2014, http://www.ssa.gov/oact/tr/2014/tr2014.pdf (accessed July 28, 2014).

[2] Today, the trust fund holds $2.8 trillion in government securities, and it will be exhausted by 2033. The 75-year shortfall between already promised benefits and expected payroll tax revenues is $10.6 trillion, but paying the IOUs in the Trust Fund will also draw from general fund revenues, bringing the true 75-year OASDI unfunded obligation to $13.4 trillion.

[3] The Social Security Trust Fund (OASI) is projected to remain solvent through 2034, while the Disability Trust Fund (DI) will run dry in 2016. In the absence of reform, DI program benefits would have to be reduced or eligibility limited beginning in less than two years. If lawmakers chose to reallocate the distribution of OASI and DI payroll taxes to boost DI solvency, it would weaken OASI solvency.

[4] David C. John, “Misleading the Public: How the Social Security Trust Fund Really Works,” Heritage Foundation Executive Memorandum No. 940, September 2, 2004, http://www.heritage.org/research/reports/2004/09/misleading-the-public-how-the-social-security-trust-fund-really-works.

[5] Social Security Administration, “Summary of the Social Security Trustees Report: Old-Age, Survivors, and Disability Insurance Program,” Social Security Board of Trustees, June 27, 1983, http://www.ssa.gov/history/pdf/1983.pdf (accessed June 10, 2014).

[6] Rachel Greszler, “History Suggests Social Security Insolvency Is Coming Sooner Than Projected,” Heritage Foundation Issue Brief No. 3980, June 27, 2013, http://www.heritage.org/research/reports/2013/06/history-suggests-social-security-insolvency-is-coming-sooner-than-projected.

[7] C. Eugene Steuerle and Caleb Quakenbush, “Social Security and Medicare Taxes and Benefits over a Lifetime: 2012 Update,” Urban Institute, http://www.urban.org/UploadedPDF/412660-Social-Security-and-Medicare-Taxes-and-Benefits-Over-a-Lifetime.pdf (accessed May 20, 2014).

[8] See Romina Boccia and Rachel Greszler, “Social Security Benefits and the Impact of the Chained CPI,” Heritage Foundation Backgrounder No. 2799, May 21, 2012, http://www.heritage.org/research/reports/2013/05/social-security-benefits-and-the-impact-of-the-chained-cpi.

[9] U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, “Health, United States, 2013,” Table 18, http://www.cdc.gov/nchs/hus/contents2013.htm#018 (accessed June 2, 2014).

[10] Mark Duggan and Scott A. Imberman, “Why Are the Disability Rolls Skyrocketing? The Contribution of Population Characteristics, Economic Conditions, and Program Generosity,” chap. 11 in David M. Cutler and David A. Wise, eds., Health at Older Ages: The Causes and Consequences of Declining Disability Among the Elderly (Chicago: University of Chicago Press, 2009), pp. 337–379.

[11] Face the Facts USA, “Thousands of Millionaires Collect Social Security,” March 5, 2013, http://www.facethefactsusa.org/facts/millionaires-receiving-social-security/ (accessed June 10, 2014).

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