The CBO projects that the trust fund, depleted in recent years, will be exhausted as of 2034. Image: larry1235/Shutterstock.com
The Congressional Budget office has issued a report showing in a different light the Social Security funding issue—the arrival of the point where the program’s reserves will be exhausted, barring a change in policy to prevent that.
Like many other analyses of the program’s finances, the CBO projects that the trust fund that had been built up over decades and that has been steadily depleted in recent years will be exhausted as of 2034. At that point, the program would be able to pay out only as much in benefits as it would be taking in from payroll taxes—only about 75 percent at the outset, falling over time to only about 70 percent.
Unlike the others, though, the new CBO report illustrates that the impact on beneficiaries would differ substantially by age group.
Using 65 as the average age to begin drawing benefits the CBO noted that the impact on starting benefits would be felt beginning with those born in 1969 and turning that age in 2034. That is, there would be no effect on the starting benefits of anyone born in the 1950s, and only a small effect, 2 percent, collectively for those born in the 1960s.
However, for those born in the 1970s, there would be a 25 percent reduction in initial benefits, for those born in the 1980s 26 percent, and for those born in the 1990s, 28 percent.
In terms of the reduction over a lifetime, it added, those born in the 1950s would see a 9 percent reduction collectively, while for those born in the 1960s it would be 19 percent, for those born in the 1970s 25 percent, and for those born in the 1980s and 1990s 27 percent.
The CBO added, though, that while under current law there would be no choice but to impose such a reduction—because benefits cannot be paid from general revenues or by borrowing— “it is unclear what specific actions the Social Security Administration would take if a trust fund was insolvent.”
5 Steps to Protect Your Federal Job During the Shutdown
Over 30K TSP Accounts Have Crossed the Million Mark in 2025
The Best Ages for Federal Employees to Retire
Best States to Retire for Federal Retirees: 2025
Primer: Early out, buyout, reduction in force (RIF)
See also,
OPM Guidance Addresses Pay Issues arising During, After Shutdown