A recent report on the state of the Social Security trust funds contains no surprises, which comes as good news in the wake of several prior similar reports, according to the Center for Retirement Research.
The latest report from the Social Security trustees show steadily increasing outlays, which "is not news; the actuaries have known the whereabouts of the baby boom (those born between 1946 and 1964) for a long time," the Center said. As that generation moves from active employment into retirement, the ratio of workers to retirees is moving from 3:1 to 2:1.
Also not news is that Social Security is facing a financing shortfall, it said. The projections show the program’s prospects are essentially unchanged from the prior report, with the trust fund "exhaustion" date remaining 2033. That’s the date that surpluses built up to the program’s credits since the last major reform in 1983 will have run out. However, that will not mean the program will go bankrupt; payroll taxes at that point will still be sufficient to pay about 75 percent of current benefit levels.
A temporary two-year reduction in the payroll tax had aggravated the financing problem, and while restoring the tax rate to is prior levels effective this year was an added cost to wage earners, that was "unquestionably good" for the Social Security program itself, it said.
Said the Center’s analysis, "While the deficit remains larger and the date of exhaustion nearer than before the recession, the story remains the same. The program faces a manageable shortfall over the next 75 years, which should be addressed soon to restore confidence in the nation’s major retirement program and to give people time to adjust to needed changes."
A proposal to move to the "chained" CPI would result in less outlays, but "any serious plan would recognize the need for additional revenues" as well, it said.