A government report issued in April on the financial solvency of the Social Security program painted a dire picture for the program’s future, saying that at current disbursement levels, the program would run completely out of funds by 2036. A new research brief says, however, that Social Security’s financial health has actually improved, but that stabilizing it should be a high priority for policymakers.
The research brief, titled “Social Security’s Financial Outlook: The 2019 Update in Perspective” and authored by Boston College Center for Retirement Research Director Alicia H. Munnell, says that much of what was included in the government’s April report doesn’t really constitute much new information for those who have followed the health of the Social Security program for some time.
“Contrary to media reports, the 2019 Trustees Report contains no real news,” the brief reads. “The program continues to run a 75-year deficit between 2 and 3 percent of taxable payrolls, and the trust fund will be exhausted in the early 2030s, after which the program can pay only about three quarters of benefits.”
In actuality, the 2019 government report reflects a slight improvement in the 75-year finances of the Social Security program, since its deficit is projected at 2.78 percent of 2019 taxable payrolls compared to the slightly higher 2,84 percent figure observed in 2018.
“The improvement, after accounting for various offsetting changes, is almost entirely due to a more favorable outlook for the Disability Insurance (DI) program,” the brief reads.
That slight improvement in program health does not make the financial issues facing the long-term viability and sustainability of the Social Security program any less pressing, however. While the amount of new information may be minimal in the government report, it still emphasizes that the program needs to address a series of imminent problems to try and maximize its longevity.
“The 2019 Trustees Report confirms what has been evident for almost three decades – namely, Social Security is facing a long-term financing shortfall which equals 1 percent of GDP,” the brief states. “The changes required to fix the system are well within the bounds of fluctuations in spending on other programs in the past.”
Stabilization of the Social Security system’s finances must become a priority of lawmakers in order to restore confidence in the ability of the country to manage its fiscal policy, and to assuage the fears of working Americans to ensure them that these benefits will exist for those who will need them when they retire.
“The long-run deficit can be eliminated only by putting more money into the system or by cutting benefits,” the brief concludes. “There is no silver bullet.”
Read the full brief at the Center for Retirement Research at Boston College.