The top actuary for Social Security’s trust funds on Tuesday confirmed that the insolvency date of those funds has moved up due to the recently-enacted tax and spending package, leaving policymakers with a little less time to stabilize the program’s finances.
The Office of the Chief Actuary for Social Security sent a letter in response to an inquiry by Senate Finance Committee Ranking Member Ron Wyden, D-Ore., about the effect of the One Big Beautiful Bill Act (OBBBA) on the safety net program’s trust funds.
Chief Actuary Karen Glenn explained in the letter that the permanent lower income tax rates, as well as temporary changes to the amounts of certain standard and itemized deductions – such as the temporarily enhanced standard deduction for seniors – will have “material effects on the financial status of the Social Security trust funds.”
Glenn wrote that over the next decade, OBBBA will increase the net costs to Social Security’s OASDI trust funds by about $168.6 billion, and the “timing of combined OASI and DI Trust Fund depletion is accelerated from the third quarter of 2034 under the 2025 Trustees Report baseline to the first quarter of 2034 following implementation of the law.”
SOCIAL SECURITY BENEFITS FACE 24% CUT IN LESS THAN A DECADE AS TRUST FUND DRIES UP, NEW ANALYSIS REVEALS
The two main trust funds are known as the Old-Age and Survivors Insurance (OASI) and the Disability Insurance (DI) trust funds – though they’re often combined as OASDI for the purpose of analyzing the trust funds’ financial status.
She also noted that over the long-range projections, OASDI’s actuarial balance will worsen by 0.16 percentage points from a negative 3.82% as estimated in the trustees’ report released earlier this year to -3.98% due to the implementation of OBBBA.
Social Security’s trustees will use those findings as an updated baseline when assessing proposals affecting the OASI and DI trust funds, such as those aimed at extending the solvency of the programs, as well as next year’s annual report.
SOCIAL SECURITY INSOLVENCY COULD SPEED UP WITH ILLEGAL IMMIGRATION CRACKDOWN
Under current federal law, benefits paid under Social Security are limited to incoming payroll tax receipts and distributions from the trust funds, and their looming insolvency in less than a decade puts beneficiaries in jeopardy of facing automatic benefit cuts if Congress and the White House fail to shore up the program’s finances.
An analysis by the nonpartisan Committee for a Responsible Federal Budget (CRFB) found that Social Security benefits would face an automatic 24% cut at the time of insolvency in late 2032, affecting 62 million Americans.
CRFB’s analysis found that for a dual-income couple with a medium household income who retires at the start of 2033, that 24% cut would amount to an $18,100 annual reduction in benefits, or a monthly cut of about $1,509. By contrast, a single-income couple at that income tier would see a $13,600 annual benefit cut.
SOCIAL SECURITY CONFIDENCE HITS 15-YEAR LOW AS YOUNGER AMERICANS INCREASINGLY LOSE FAITH IN SYSTEM
A dual- and low-income couple would see an $11,000 annual benefit cut, while a single-income couple would see benefits decline by $8,200 over the year, CRFB found.
For high-income households, a dual-income couple would face benefit cuts of $24,000 a year, while a single-income couple would have benefits fall by $18,000 for the year, according to the analysis.
Over time, benefit cuts will deepen as the growth in Social Security’s expenses continues to outpace incoming revenues, as CRFB projected the benefit cut would rise to well over 30% by 2099.
“Policymakers pledging not to touch Social Security are implicitly endorsing these deep benefit cuts for 62 million retirees in 2032 and beyond,” CRFB said. “It is time for policymakers to tell the truth about the program’s finances and to pursue trust fund solutions to head off insolvency and improve the program for current and future generations.”
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