Social Security unfunded liabilities rise to $12.5 trillion, according to trustees re
Social Security unfunded liabilities rise to $12.5 trillion, according to trustees report
Jul 13, 2017, 2:58 PM
Social Security's unfunded liabilities total $12.5 trillion in present-dollar terms over a 75-year timeframe, the administration's trustees reported Thursday, an increase of $1.2 trillion from last year's estimate.
The trustees report showed that the projected exhaustion date for Social Security's combined trust fund is 2034, unchanged from a year ago. Medicare's trust fund, though, is in better shape than previously estimated and will run out a year later than previously anticipated, in 2029.
At those dates, beneficiaries would face the prospect of an immediate cut in benefits unless policy were changed in some way to avoid that outcome. Social Security beneficiaries would see a cut of about a quarter in their checks, which average about $1,360 a month at the end of 2016 for retirees.
In a statement, Treasury Secretary Steven Mnuchin said that the programs are secure and will remain secure, but that "tens of millions of Americans rely on these programs and it is important that we ensure their long-term stability."
In order to preserve the programs, he said, "we should focus on strengthening the economy today," as compounding growth would ease the projected shortfalls. To that end, he called for enacting tax and regulatory reforms.
President Trump has declined to propose cost-saving reforms to Social Security retirement or Medicare. Many congressional Republicans, including House Speaker Paul Ryan, have called for reforming Medicare through a premium support model.
To close the 75-year gap in funding for Social Security liabilities through payroll taxes alone, according to the trustees, the government would have to permanently raise the rate 2.76 percentage points to 15.16 percent. Alternatively, benefits would need to immediately be cut by 17 percent for all of Social Security's 61 million beneficiaries.
Spending on Social Security and Medicare is expected to grow in the years ahead, according to the Congressional Budget Office, both because the population is aging and because healthcare costs are set to grow faster than economic output.
The baby boom generation began reaching retirement age in 2011 and will continue to retire in large numbers until 2029, at which point roughly one in five Americans will be seniors, according to the Census Bureau.
In the 1960s, there were four workers for each Social Security benefit. Today, that ratio is under three, and it is projected to fall to two during the 75-year timeframe.
http://www.washingtonexaminer.com/so...rticle/2628588