You have probably read or heard that the Social Security trust funds will be depleted by 2033, based on the commonly cited “intermediate” actuarial projections. This is something of a simplification. The better characterization is that the Disability Income (DI) trust fund will be depleted by 2016, while the Old-Age and Survivors Insurance (OASI) trust fund will be depleted by 2035. OASI, of course, is what most of us think of as “Social Security”. The common 2033 date is based on the assumption that Congress will pass a law that transfers revenues from OASI to DI so they deplete at the same time.
(I should note that these dates are based on the 2013 Trustees’ Report, issued in April 2013. A more recent report by the CBO, issued in December 2013, reaches basically the same conclusions, projecting DI depletion in 2017, OASI depletion in 2033 and combined depletion in 2031. I will generally use the Trustees’ Report, because it contains more information overall and because it aligns with various additional analyses that I will also be citing.)
What really surprises me is the lack of widespread alarm regarding these projections. I think the public would be quite alarmed if it understood the impact of trust fund depletion if no laws are changed. For DI, it means that in two or three years the benefits for all projected 11 million DI beneficiaries will be reduced by about 20%, to the level that can be supported out of current payroll taxes. Are these 11 million Americans aware of this? Has anyone informed them? Are they besieging their reps and senators? It is certainly not making the news.