The Social Security Trustees released its annual report on Social Security’s finances today. Because Social Security is especially important to women, this news is of particular interest. So here are five facts you should know:
- Social Security has the resources to pay 100 percent of promised benefits until 2034. (That’s a year later than last year, when the projection was to 2033.)
- After that, even with no changes, Social Security can pay 79 percent of promised benefits from the payroll taxes workers and employers will continue to pay into Social Security. (That’s up from 77 percent last year.)
- Social Security ran a surplus in 2014, taking in more in payroll taxes and interest income than it paid out in benefits. It will continue to run surpluses through 2019. After that, it can tap into its Trust Funds (that’s what they’re there for).
- The combined Social Security Trust Funds hold reserves of $2.8 trillion.
- By making modest changes, such as having higher earners pay payroll taxes on all of their earnings, the way the vast majority of workers do, Congress can strengthen Social Security’s long-term finances and improve the adequacy of benefits.
Yet even though our Social System holds a total of $2.8 trillion in reserves, millions of disabled workers and their families are facing a 20 percent cut in vital disability insurance benefits next year unless Congress takes action. How can this be?
Social Security is an integrated family insurance plan. It provides security to workers and their families when income is lost due to retirement, disability, or death. The payroll taxes that workers and employers pay into Social Security goes into two legally separate Trust Funds: the Old Age and Survivors’ Trust Fund, to pay retirement and survivor benefits, and the Disability Insurance Trust Fund to pay disability benefits. The Trustees project that the Disability Trust Fund will be depleted in 2016, after which only 81 percent of benefits will be payable. (This shortfall isn’t because of abuse of the disability program; in fact, based on demographic trends, the Trustees predicted 20 years ago that the Disability Insurance program would run short in 2016 largely because of the aging of the large baby boom generation into disability-prone years and women’s increased labor force participation, which would (and did) greatly increase the number of women who qualified for disability insurance benefits.
Cuts to disability benefits would be a disaster for women and their families. But it’s really a phony crisis that Congress can easily avoid. Eleven times before—and in both directions—Congress has rebalanced the Trust Funds by reallocating payroll taxes between them. That simple step would ensure that all Social Security benefits could be paid in full until 2034.
Representative Xavier Becerra has an even better idea. The One Social Security Act recognizes that Social Security is one program that Americans count on at all stages of their lives. When a worker with a disability reaches full retirement age, her benefits continue without change or interruption—even though, on the books, the payments will come out of the Old Age and Survivors program instead of the Disability Insurance program. The same Board of Trustees manages both programs—and regularly reports on how long benefits could be paid from the combined Trust Fund reserves. The One Social Security Act would unify the two Trust Funds into one—ensuring that the Social Security benefits we’ve earned will be there when we and our families need it.