In 2006
At the end of 2006, 49 million people were receiving benefits:
34 million retired workers and their dependents, 7 million survivors of deceased
workers, and 9 million disabled workers and their dependents. During the year an
estimated 162 million people had earnings covered by Social Security and paid
payroll taxes. Total benefits paid in 2006 were $546 billion. Income was
$745 billion, and assets held in special issue U.S. Treasury securities grew to
$2.0 trillion.
Short-Range Results
The OASI and DI Trust Funds, individually and combined, are
adequately financed over the next 10 years under the intermediate assumptions.
The combined assets of the OASI and DI Trust Funds are projected to increase
from $2,048 billion at the beginning of 2007, or 345 percent of annual
expenditures, to $4,210 billion at the beginning of 2016, or 407 percent of
annual expenditures in that year. Combined assets were projected in last year's
report to rise to 344 percent of annual expenditures at the beginning of 2007,
and 407 percent at the beginning of 2016.
Long-Range Results
Under the intermediate assumptions, OASDI cost will increase more
rapidly than tax income between about 2010 and 2030, due to the retirement of
the large baby-boom generation. After 2030, increases in life expectancy and
relatively low fertility rates will continue to increase Social Security system
costs relative to tax income, but more slowly. Annual cost will exceed tax
income starting in 2017 at which time the annual gap will be covered with cash
from redemptions of special obligations of the Treasury that make up the trust
fund assets, until these assets are exhausted in 2041. Separately, the DI fund
is projected to be exhausted in 2026 and the OASI fund in 2042. For the 75-year
projection period, the actuarial deficit is 1.95 percent of taxable payroll,
0.06 percentage point smaller than in last year's report. The open group
unfunded obligation for OASDI over the 75-year period is $4.7 trillion in
present value, and is $0.1 trillion above the measured level of a year ago. In
the absence of any changes in assumptions, methods, and starting values, the
unfunded obligation would have risen to $4.8 trillion due to the change in the
valuation date.
The OASDI annual cost rate is projected to increase from
11.21 percent of taxable payroll in 2007, to 16.59 percent in 2030, and to 18.55
percent in 2081, or to a level that is 5.20 percent of taxable payroll more than
the projected income rate for 2081. In last year's report the OASDI cost for
2080 was estimated at 18.74 percent, or 5.38 percent of payroll more than the
annual income rate for that year. Expressed in relation to the projected gross
domestic product (GDP), OASDI cost is estimated to rise from the current level
of 4.3 percent of GDP, to 6.2 percent in 2030, and to 6.3 percent in 2081.
Conclusion
Annual cost will begin to exceed tax income in 2017 for the
combined OASDI Trust Funds, which are projected to become exhausted and thus
unable to pay scheduled benefits in full on a timely basis in 2041 under the
long-range intermediate assumptions. For the trust funds to remain solvent
throughout the 75-year projection period, the combined payroll tax rate could be
increased during the period in a manner equivalent to an immediate and permanent
increase of 1.95 percentage points, benefits could be reduced during the period
in a manner equivalent to an immediate and permanent reduction of 13.0 percent,
general revenue transfers equivalent to $4.7 trillion in present value could be
made during the period, or some combination of approaches could be adopted.
Significantly larger changes would be required to maintain solvency beyond 75
years.
The projected trust fund deficits should be addressed in a timely
way to allow for a gradual phasing in of the necessary changes and to provide
advance notice to workers. Making adjustments sooner will allow them to be
spread over more generations. Social Security plays a critical role in the lives
of this year's (2007) 50 million beneficiaries and 163 million covered workers and their families. With
informed discussion, creative thinking, and timely legislative action, we will
work with Congress and others to ensure that Social Security continues to
protect future generations.