Social Security Board of Trustees: Outlook of Combined Trust Funds Improves
The Social Security Board of Trustees released its annual report on the financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to become depleted in 2035, one year later than projected last year, with 80 percent of benefits payable at that time.
The OASI Trust Fund is projected to become depleted in 2034, one year later than last year’s estimate, with 77 percent of benefits payable at that time. The DI Trust Fund asset reserves are not projected to become depleted during the 75-year projection period.
- The asset reserves of the combined OASI and DI Trust Funds declined by $56 billion in 2021 to a total of $2.852 trillion.
- The total annual cost of the program is projected to exceed total annual income in 2022 and remain higher throughout the 75-year projection period. Total cost began to be higher than total income in 2021. Social Security’s cost has exceeded its non-interest income since 2010.
- The year when the combined trust fund reserves are projected to become depleted, if Congress does not act before then, is 2035 – one year later than last year’s projection. At that time, there would be sufficient income coming in to pay 80 percent of scheduled benefits.
Other highlights of the Trustees Report include:
- Total income, including interest, to the combined OASI and DI Trust Funds amounted to $1.088 trillion in 2021. ($980.6 billion from net payroll tax contributions, $37.6 billion from taxation of benefits, and $70.1 billion in interest)
- Total expenditures from the combined OASI and DI Trust Funds amounted to nearly $1.145 trillion in 2021.
- Social Security paid benefits of $1.133 trillion in calendar year 2021. There were about 65 million beneficiaries at the end of the calendar year.
- The projected actuarial deficit over the 75-year long-range period is 3.42 percent of taxable payroll – lower than the 3.54 percent projected in last year’s report.
- During 2021, an estimated 179 million people had earnings covered by Social Security and paid payroll taxes.
- The cost of $6.5 billion to administer the Social Security program in 2021 was a very low 0.6 percent of total expenditures.
- The combined Trust Fund asset reserves earned interest at an effective annual rate of 2.5 percent in 2021.
The Q & A for the month:
Question: I have a client that filed for benefits in Nov 2021, at age 64. She received a benefit check in Dec and Jan; meanwhile, she was paid by her employer in December for exit pay/bonus. She received a letter on March 25 that says they aren’t paying benefits for January and February, but as of today, she hasn’t received any payments for March or April.
Answer: She can make as much as she wants from January through October 2021, but in November and December, she can only make $1,580 each month (2021 monthly limit). However, if she last worked in October, but received sick pay, vacation pay, severance pay, etc., that does not count when she receives it but when she earned it, which would have been prior to November. Page 4: https://www.ssa.gov/pubs/EN-05-10069.pdf. She needs to call Social Security to explain the special payments that she received after she retired so that they can make the necessary inputs in the system.