Social Security Will Be Bankrupt in 2033
August 1, 2014
In a report for the American Action Forum, Douglas Holtz-Eakin, Gordon Gray and Conor Ryan break down the details of the latest Medicare Trustees report. The Trustees report makes clear that the Social Security program (including its retirement and disability funds) will go entirely bankrupt in 2033.
The financial picture is bleak. Social Security collected $752.2 billion in non-interest income in 2013, yet it spent $822.9 billion. Since 2010, the program has run a cumulative deficit of $219.7 billion, and the program will owe almost $9 trillion more than it is estimated to bring in over the next 75 years.
When funds are depleted in 2033, the American Action Forum report explains that the program will be able to fund just 77 percent of promised benefits -- a number that will continue to fall. Without some sort of reform overhaul, the payroll tax (which funds Social Security) would have to rise by 24 percent.
The Social Security Disability Insurance (SSDI) program is also in poor financial straits:
- The program spent $143.4 billion in 2013, despite taking in just $106.5 billion in non-interest income. Since 2005, SSDI has added more than $179.8 billion to the debt.
- In two years, the SSDI trust fund will be exhausted.
- The program's 75-year liability is $1.2 trillion.
Recently, Liqun Liu, Andrew Rettenmaier and Thomas Saving of the Private Enterprise Research Center authored a report for the National Center for Policy Analysis that analyzed possible Social Security reforms. The authors explained how a reformed Social Security program would benefit workers while reducing the size of the federal budget.
Source: Douglas Holtz-Eakin, Gordon Gray and Conor Ryan, "The Future of America's Entitlements: What You Need to Know About the Medicare Trustees Report," American Action Forum, July 28, 2014.
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