8 Positive Findings Hiding in the Social Security Trustees Report

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1. The solvency of the retirement and disability trust fund has improved.

When combined, funds for both Social Security and disability payments are set to become depleted and unable to pay scheduled benefits in full on a timely basis in 2035. While concerning, this is actually one year later than was projected in 2023.

Nancy Altman, president of Social Security Works, told ThinkAdvisor that this solvency extension is due to robust job growth, low unemployment and rising wages.

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2. Considered alone, the disability trust fund is in a good position.

The Disability Insurance Trust Fund is projected to be able to pay 100% of total scheduled benefits through at least 2098, the last year of the new report's projection period.

Last year's report projected that the DI Trust Fund would be able to pay scheduled benefits through at least 2097, the last year of that report's projection period.

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3. Much of the funding imbalance stems from outside factors.

According to Social Security’s chief actuary, rising inequality is the primary unanticipated reason that the program faces a funding shortfall in a decade's time. The primary anticipated reason, as the report shows, is the rapid increase in retired Americans relative to the number of people in the workforce.

Wage inequality has cost Social Security as much as $1.4 trillion in lost revenue over the past decade, according to Altman, thanks to a significant proportion of earned wages now exceeding the current taxable maximum of $168,600.

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4. The Medicare Part A trust fund is in better shape.

The Federal Hospital Insurance Trust Fund, also known as Medicare Part A, is a key part of the U.S. health insurance program for those 65 and older. The fund pays for health care services like hospital stays and hospice care for Medicare recipients.

According to this year's trustees report, the fund will be able to pay 100% of total scheduled benefits until 2036, five years later than reported last year. At that point, the HI Fund's reserves will become depleted and continuing program income will be sufficient to pay 89% of total scheduled benefits.

This improvement was due to several factors, including a policy change correcting for how medical education expenses are accounted for in Medicare Advantage rates starting in 2024, higher payroll tax income resulting from the stronger-than-expected economy and actual 2023 expenditures that were lower than projected last year.

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5. Some of the key trust funds actually grew last year.

The data in the report covers the four key reserve funds overseen by the trustees, including the Old-Age and Survivors Insurance Trust Fund, the Disability Insurance Trust Fund, the Hospital Insurance Trust Fund and the Supplementary Medical Insurance Trust Fund.

At the end of 2023, OASI asset reserves were $2.7 trillion, DI asset reserves were $147 billion, HI asset reserves were $208.8 billion, and SMI asset reserves were $187.9 billion. While the OASI and SMI Trust Fund asset reserves declined in 2023, the DI and HI Trust Fund asset reserves increased by $29 billion and $12.2 billion, respectively.

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6. Annual deficits for the combined OASDI funds have shrunk.

The annual deficit of $41.4 billion in 2023 for the combined OASI and DI trust funds was 1.13% of taxable payroll last year. Projected annual deficits for the joint OASDI program gradually increase from 1.68% of taxable payroll in 2024 to 5.08% in 2080, and then they decline to 4.64% of taxable payroll in 2098.

Compared to the 2023 report, the 2024 report shows smaller expected annual deficits through 2077 but larger deficits thereafter. For the 75-year projection period, the average annual deficit as a percentage of taxable payroll is about 0.13 percentage point lower than shown in the 2023 report.

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7. The negative actuarial balance for combined OASDI funds also shrank.

The long-range adequacy of the OASI, DI and HI Trust Funds is measured using the actuarial balance. This approach helps to demonstrate how expected income for the 75-year projection period compares to the expected costs for the same period, as a percentage of taxable payroll.

A negative actuarial balance (i.e., a deficit) indicates that estimated income is insufficient to meet estimated trust fund obligations for all or part of the 75-year period. A positive actuarial balance (i.e., a surplus) indicates that estimated income is more than sufficient to meet all obligations.

The combined OASDI trust funds have a projected long-range actuarial deficit equal to 3.50% of taxable payroll, compared with 3.61% in the 2023 report. The actuarial deficit decreased in this year's report primarily due to changes in economic factors and the lower ultimate disability incidence rate — effects partially offset by the lower assumed ultimate total fertility rate.

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8. Better outcomes are possible.

Throughout their 2024 report, the Social Security trustees highlight the need for substantial changes to address the financial challenges of Social Security and Medicare. They recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in changes gradually and give workers and beneficiaries time to adjust their expectations and behavior.

While the challenge is serious, it is also important to recognize that Social Security still has an accumulated surplus of $2.79 trillion. It is 90% funded for the next quarter century, 83% for the next half century and 81% for the next three quarters of a century.

Implementing changes sooner rather than later would allow more generations to share in the needed revenue increases or reductions in scheduled benefits. With informed discussion, creative thinking and timely legislative action, Social Security and Medicare can continue to protect future generations.

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8 Positive Findings Hiding in the Social Security Trustees Report

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1. The solvency of the retirement and disability trust fund has improved.

2. Considered alone, the disability trust fund is in a good position.

3. Much of the funding imbalance stems from outside factors.

4. The Medicare Part A trust fund is in better shape.

5. Some of the key trust funds actually grew last year.

6. Annual deficits for the combined OASDI funds have shrunk.

7. The negative actuarial balance for combined OASDI funds also shrank.

8. Better outcomes are possible.

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8 Positive Findings Hiding in the Social Security Trustees Report

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1. The solvency of the retirement and disability trust fund has improved.

2. Considered alone, the disability trust fund is in a good position.

3. Much of the funding imbalance stems from outside factors.

4. The Medicare Part A trust fund is in better shape.

5. Some of the key trust funds actually grew last year.

6. Annual deficits for the combined OASDI funds have shrunk.

7. The negative actuarial balance for combined OASDI funds also shrank.

8. Better outcomes are possible.

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