March 31, 2023

Social Security Faces Serious Financial Shortfalls, and Other Takeaways from the Trustees Report

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The Social Security Trustees released their annual report on the program’s trust funds, showing that the largest component of the federal budget is on an unsustainable path. Without reform, the Social Security Trust Funds will soon be depleted and unable to pay full benefits.

Below are the key takeaways from today’s report:

  1. The Social Security Trust Funds combined would be depleted by 2034, at which point benefits would be reduced by 20 percent. Taken individually, the Old-Age & Survivors Insurance (OASI) Trust Fund would be depleted in 2033 and lead to a 23 percent reduction in benefits and the Disability Insurance (DI) Trust Fund would not be depleted over the 75-year projection period.
  2. The Social Security Trust Funds combined would be depleted by 2034


  3. Social Security faces large and rising imbalances. Relative to the size of the economy, the combined annual cash shortfall for Social Security will climb from 0.5 percent of gross domestic product (GDP) in 2023 to 1.1 percent in 2034. Social Security faces a 75-year actuarial imbalance of 3.6 percent of taxable payroll, up from 3.4 percent as reported in last year’s report.
  4. Social Security is facing significant cash shortfalls


  5. The program’s financial shortfall is caused largely by an aging population. As a result of the nation’s changing demographics, the number of workers contributing to the program is growing more slowly than the number of beneficiaries receiving monthly payments. In 1963, there were 4.1 workers per beneficiary; that ratio has dropped to 2.7 today and will continue to fall in the future.
  6. As the population ages, fewer workers will be paying taxes to support each Social Security beneficiary


  7. Delaying reform to Social Security is costly. If lawmakers act soon to address the trust fund shortfalls, they will be able to phase in changes gradually and responsibly in a way that does not harm vulnerable populations. However, delaying reform would require larger changes to the program. If action is not taken until 2034, the tax increases or benefit reductions required to stabilize the program’s financing would be nearly 20 percent larger than if action were taken today.
  8. Waiting to reform Social Security will increase the magnitude of change needed


Social Security is the largest single line item in the budget and a key driver of the national debt; it is also an essential component of our economy and society. Regardless of what policies lawmakers choose, if reforms are not enacted soon, recipients could see a large decrease in their benefits. Because millions of people depend on Social Security, lawmakers need to ensure that benefit payments are adequate for individual financial security, but also sustainable to ensure the program’s solvency.

Related: Social Security And Medicare Trust Funds Could Be Depleted Within The Next Decade

Image credit: Photo by Spencer Platt/Getty Images

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