Many policy makers argue that even if Social Security spends more out of the Trust Fund than it takes in with payroll taxes, this is not a big deal because the program is solvent until 2033. A new study debunks this myth. Conventional wisdom has been while the “real money” that does not exist in the trust fund, the program it still is solvent for at least a decade. In the Trustees’ Reports to Congress about the Social Security and Medicare program over the last fiscal year year point to that the respective trust fund balances will grow until 2019, but program costs are projected to exceed income in 2020. If no action is taken then the trust funds will be depleted by 2033. After the trust funds no longer have any balances then only tax revenue is left to fund the program, which with the demographics toward and more beneficiaries and fewer works paying taxes the programs will only have enough tax revenue to cover only three-quarters of scheduled Social Security benefits through 2088. This number is even worse for the SSDI which could run out by the end of 2016.
The conclusion is that Social Security really is in worse shape than most originally thought. New studies from two Ivy League schools Harvard and Dartmouth researchers corroborate this. In looking that SSA’s actuarial forecasts researchers found that these have have been consistently overstating the financial health of the program’s trust funds since 2000. One of the study author’s even stated to CNBC that “ These biases are getting bigger and they are substantial,” said Gary King, co-author of the studies and director of Harvard’s Institute for Quantitative Social Science. “[Social Security] is going to be insolvent before everyone thinks.” The Samir Soneji and Harvard doctoral candidate Konstantin Kashin went on to note in their study that, “Trustees Reports after 2000 all overestimated the assets in the program and overestimated solvency of the Trust Funds.
These new studies show that Congress needs to act and fast to restore retirement security to seniors.