"According to the recent report of the Board of Trustees of
the Social Security Trust Funds, the program’s finances are
in a similar, albeit marginally worse, position in 2021 to
what they were in 2020. Under intermediate assumptions,
the projected combined Trust Fund asset depletion date is
2034 (versus 2035 in last year’s report), after which the
percentage of benefits payable would be 78% (versus 79%
in 2020).
Social Security Overview
Social Security is a self-financing program that in 2021
covers approximately 176 million workers and provides
monthly cash benefits to over 65 million beneficiaries. It is
the federal government’s largest program in terms of both
the number of people affected (i.e., covered workers and
beneficiaries) and its finances. Social Security is composed
of Old-Age and Survivors Insurance (OASI) and Disability
Insurance (DI), referred to collectively as OASDI.
The OASDI program is primarily financed (89.6% of total
revenues in 2020) through a payroll tax applied to Social
Security–covered earnings up to an annual limit. In
addition, some beneficiaries pay income tax on a portion of
their Social Security benefits, accounting for 3.6% of total
revenue in 2020. From 1983 to 2009, the OASDI program
collected more in tax revenues than needed to pay benefits.
Excess revenues are held in interest-bearing U.S. Treasury
securities, providing a third source of funding for the
program. In 2020, interest revenues accounted for 6.8% of
total revenues. Monthly benefits are the largest OASDI
program cost, accounting for 99.0% of total costs in 2020.
Administrative and other costs accounted for the remainder.
The Trust Funds
Both the OASI and DI programs use a trust fund financing
mechanism. Monies credited to these trust funds are
earmarked for paying Social Security benefits and certain
administrative costs. Using a trust fund allows OASI and DI
programs to track their respective programs’ revenues and
costs and to hold any accumulated assets from years when
revenues exceed costs. The OASI Trust Fund and DI Trust
Fund are legally distinct entities; they are discussed here
collectively as the OASDI Trust Funds, or the trust funds.
A Board of Trustees manages the trust funds. The trustees
are required to report to Congress annually on the trust
funds’ status and financial operations. In general, the trust
funds’ solvency—the ability to pay full benefits scheduled
under current law on a timely basis—indicates their status.
If assets held in the trust funds were to be depleted, the
OASDI program could pay out in benefits only what it
receives in revenues. Table 1 shows the trust funds’ key
dates under the trustees’ intermediate assumptions, which
reflect their best estimate of future economic, demographic,
and program-specific factors.."
Social Security
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