Social Security Funds to Run Dry by 2029
The Congressional Budget Office projects that the Social Security program will run out of funds by 2029 if changes aren’t made, according to its most recent report.
Around 61 million Americans currently receive Social Security payments, and in 2016 their combined benefits totaled $905 billion, amounting to almost a quarter of all federal spending, the CBO writes.
The program is funded primarily by payroll taxes, which account for 96% of its revenues, with the remaining 4% derived from income taxes on the Social Security benefits themselves, according to the report. In fiscal year 2016, that revenue only reached $859 billion, the CBO says.
Since 2010, Social Security's annual outlays have exceed revenues, the CBO says. In 2016, spending outpaced non-interest income by around 7%, according to the report. At this pace, the Old-Age and Survivors Insurance fund, which provides benefits for retired workers, their spouses and children, and survivors of deceased workers and accounts for 83% of beneficiaries, will be exhausted by 2030, according to the CBO.
The Disability Insurance fund, which covers the remaining 17% of beneficiaries, who are disabled workers or their spouses and children, will run out of money by 2022, the CBO says. The combined funds will therefore be exhausted by 2029, according to the report.
CBO’s projections are based on the assumption that current laws governing Social Security remain the same, the CBO writes. They also incorporate macroeconomic effects of fiscal policy through 2046 but not after, according to the report.
Meanwhile, the Social Security Administration, by law, isn’t allowed to pay full benefits if revenues aren’t sufficient to cover them, according to the report. Therefore, without changes to the Social Security program, retirement benefit recipients will see a 29% cut in their payments in 2030, according to the CBO.