2020 Social Security Projections Report
By: Scott Fischer, Senior Investment Consultant
The Social Security Board of Trustees released their annual report on the long-term financial status of the Social Security Trust Funds. Read the full report below:
- 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 2035, the same as projected last year, with 79% of benefits payable at that time.
- The OASI Trust Fund is projected to become depleted in 2034, the same as last year’s estimate, with 76% of benefits payable at that time.
- The DI Trust Fund is estimated to become depleted in 2065, extended 13 years from last year’s estimate of 2052, with 92% of benefits still payable.
In the 2020 Annual Report to Congress, the Trustees announced:
- The asset reserves of the combined OASI and DI Trust Funds increased by $2.5 billion in 2019 to a total of $2.897 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 2035 – the same as last year’s projection. At that time, there would be sufficient income coming in to pay 79% of scheduled benefits.
Projections in 2020 Report Do Not Reflect the Potential Effects of the COVID-19 Pandemic
“The projections in this year’s report do not reflect the potential effects of the COVID-19 pandemic on the Social Security program. Given the uncertainty associated with these impacts, the Trustees believe it is not possible to adjust estimates accurately at this time,” said Andrew Saul, Commissioner of Social Security. “The duration and severity of the pandemic will affect the estimates presented in this year’s report and the financial status of the program, particularly in the short term.”
Other highlights of the Trustees Report include:
- Total income, including interest, to the combined OASI and DI Trust Funds amounted to $1.062 trillion in 2019. ($944.5 billion from net payroll tax contributions, $36.5 billion from taxation of benefits, and $81 billion in interest)
- Total expenditures from the combined OASI and DI Trust Funds amounted to $1.059 trillion in 2019.
- Social Security paid benefits of $1.048 trillion in calendar year 2019. There were about 64 million beneficiaries at the end of the calendar year.
- The projected actuarial deficit over the 75-year long-range period is 3.21% of taxable payroll – higher than the 2.78% projected in last year’s report.
- During 2019, an estimated 178 million people had earnings covered by Social Security and paid payroll taxes.
- The cost of $6.4 billion to administer the Social Security program in 2019 was a very low 0.6% of total expenditures.
- The combined Trust Fund asset reserves earned interest at an effective annual rate of 2.8% in 2019.
View the 2020 Trustees Report at www.socialsecurity.gov/OACT/TR/2020/.