Wharton joins a growing number of groups sounding the alarm on Social Security, who say the program’s disappearing retirement trust fund is estimated to run out of money in the next few years. The only debate is when.
A recent report from the Social Security trustees estimated the program could become insolvent as early as the fourth quarter of 2032, in about six years.
Now, a new Penn Wharton Budget Model (PWBM), from the University of Pennsylvania, projects the Social Security Old-Age and Survivors Insurance (OASI) Trust Fund won’t be depleted until a few months later in February 2033; and Social Security’s combined fund, including Disability Insurance (DI), won’t grow insolvent until a few years after that, in February 2035. (This estimate takes both fertility and mortality projections into consideration.)
However, the two groups are clearly in agreement that the funds will be depleted in less than a decade. (PWBM is non-partisan, and the only group outside of the government that produces independent long-range projections of Social Security’s finances.)
Currently, 63 million Americans (54 million retired workers and 9 million of their survivors and dependents) receive Social Security benefits. The program was launched in 1940.
As it stands now, if nothing is done, Social Security’s fiscal deficit would, by law, automatically trigger a massive cut in benefits.
“It’s a simple math problem—it’s not a simple political problem,” Karen Glenn, chief actuary of the Social Security Administration (SSA), said in a recent conference call. “We need to either raise scheduled revenue, reduce scheduled benefits or some combination of the two.”
With that in mind, the non-partisan Committee for a Responsible Federal Budget (CRFB) has proposed limiting payouts at $100,000 a year for couples (that’s $50,000 for a single retiree).
If the fund runs dry, seniors and retirees, already struggling with the high cost of living, including higher grocery and gas prices, could take a major financial hit. Many older Americans rely on their monthly checks to pay expenses. Even proposed cuts to that allowance could deeply affect the nation’s elderly and their dependents.
