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Wednesday, September 1, 2021

Social Security to be Depleted by 2033

The Social Security Board of Trustees today released its annual report on the long-term 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 2034, one year earlier than projected last year, with 78 percent of benefits payable at that time. 

For workers' compensation claims this will have serious impact on"reverse offset states," where the employer/insurance carier take a setoff from the payment of workers' compensation benefits prior to retirement age,

The OASI Trust Fund is projected to become depleted in 2033, one year sooner than last year’s estimate, with 76 percent of benefits payable at that time. The DI Trust Fund is estimated to become depleted in 2057, eight years earlier than last year’s estimate, with 91 percent of benefits still payable.

In the 2021 Annual Report to Congress, the Trustees announced:

  • The asset reserves of the combined OASI and DI Trust Funds increased by $11 billion in 2020 to a total of $2.908 trillion.
  • The total annual cost of the program is projected to exceed total annual income, for the first time since 1982, in 2021 and remain higher throughout the 75-year projection period. As a result, asset reserves are expected to decline during 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 2034 – one year earlier than last year’s projection. At that time, there would be sufficient income coming in to pay 78 percent of scheduled benefits.

“The Trustees’ projections in this year’s report include the best estimates of the effects of the COVID-19 pandemic on the Social Security program,” said Kilolo Kijakazi, Acting Commissioner of Social Security. “The pandemic and its economic impact have had an effect on Social Security’s Trust Funds, and the future course of the pandemic is still uncertain. Yet, Social Security will continue to play a critical role in the lives of 65 million beneficiaries and 176 million workers and their families during 2021.”

Other highlights of the Trustees Report include:

  • Total income, including interest, to the combined OASI and DI Trust Funds, amounted to $1.118 trillion in 2020. ($1.001 trillion from net payroll tax contributions, $41 billion from taxation of benefits, and $76 billion in interest)
  • Total expenditures from the combined OASI and DI Trust Funds amounted to $1.107 trillion in 2020.
  • Social Security paid benefits of $1.096 trillion in the calendar year 2020. 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 3.54 percent of taxable payroll – higher than the 3.21 percent projected in last year’s report.
  • During 2020, an estimated 175 million people had earnings covered by Social Security and paid payroll taxes.
  • The cost of $6.3 billion to administer the Social Security program in 2020 was a very low 0.6 percent of total expenditures.
  • The combined Trust Fund asset reserves earned interest at an effective annual rate of 2.6 percent in 2020.

The Board of Trustees usually comprises six members. Four serve by virtue of their positions with the federal government: Janet Yellen, Secretary of the Treasury and Managing Trustee; Kilolo Kijakazi, Acting Commissioner of Social Security; Xavier Becerra, Secretary of Health and Human Services; and Martin J. Walsh, Secretary of Labor. The two public trustee positions are currently vacant.

View the 2021 Trustees Report at www.socialsecurity.gov/OACT/TR/2021/.

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Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (Thomson-Reuters). For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  jon@gelmans.com  has been representing injured workers and their families who have suffered occupational accidents and illnesses.

Blog: Workers ' Compensation

Twitter: jongelman

LinkedIn: JonGelman

LinkedIn Group: Injured Workers Law & Advocacy Group

Author: "Workers' Compensation Law" Thomson-Reuters