from the Desk of Brian Bickett, CFP®
Annual Social Security Trustee Report is out…
The Social Security Trustee report released on Monday includes updated estimates for the expected funding for both the Social Security Retirement Benefits and Disability programs based on the financial performance from 2018.
The Disability Income program’s funding expectation where drastically increased due to the continuation of the decreasing number of applications since 2010 and the decreasing number of disabled-worker beneficiaries receiving payments since 2014. While the trends look good for the Disability Income program’s funding, I do not know the underlying reason for the decline in applications and decrease in participants. Some more research is needed to determine if this truly good news for those who do need the program.
Some interesting highlights from separating the OASI side of the ledger for 2018 include:
- An estimated 176 million people had earnings covered by Social Security and paid payroll taxes which contributed to the total income of $831 billion including the interest from the OASI trust fund and taxation of benefits.
- An estimated 53 million retired workers and survivors received retirement benefits at a total cost of $853.5 billion including $844.9 billion in benefits paid, $3.8 billion in administrative costs and $4.8 billion to the Railroad Retirement financial interchange.
- While the OASI trust fund reserves where at $2,820.3 billion at the start of 2018, they ended at $2,797.9 billion for a net loss of $22.4 billion – the beginning of an accelerating trend.
- The expected depletion of the OASI trust fund in 2034 remains unchanged from the previous year’s estimates.
- If placed into effect immediately, an increase in payroll taxes by 2.70%, a decrease in future benefits by 20%, or some combination of the two would resolve the expected OASI funding shortfall for the next 75 years.
- If not placed into effect until 2035, it would take an increase in payroll taxes by 3.65%, a decrease in future benefits by 23% or some combination to resolve the expected shortfall.
The trustee’s were very clear to point out what every one of us intuitively knows – the sooner you address a problem, the smaller the size of the change needed.
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The 2019 Social Security Trustees report was released on Monday and covers long term financial estimates for both the Old Age and Survivors Income (OASI – commonly referred to as Retirement Benefits) along with the Disability Income (DI) programs.
Diving further into the recently released Social Security Trustees Report…
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