Economic Snapshot | Retirement

Social Security projections suggest no crisis

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Snapshot for April 5, 2000

Social Security projections suggest no crisis

The trustees of the Social Security program recently released their annual report, which found that Social Security payroll tax revenue will be sufficient to cover the costs of all benefit payments until 2015. After that time, the money that is currently accumulating in the trust fund (currently $900 billion and rising) can be used to cover any and all shortfall in funding. But by 2037, the trust fund will be depleted. (In last year’s report, this exhaustion point was reached in 2034, so the situation has improved.) But even in 2037, with no change in the program as it stands today, tax revenue will still be sufficient to pay 72% of benefits. (See the figure below.) Even in 2075 current tax revenue levels will still cover 68% of benefits. So while the critics are correct to say that Social Security cannot pay all benefits for the next 75 years, it is also true that 75 years from now there will be sufficient money for over two-thirds of benefit payments. Given the facts of the matter, it’s hard to describe the situation as a Social Security “crisis,” and benefit cuts or fundamental changes in the program — like creating a system of individual accounts — are unnecessary and unwise.

Source: Social Security Trustee’s annual report.

For more information on this topic, see the Issue Brief, Getting Better All the Time.

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