The Board of Trustees for the Old-Age, Survivors and Disability Insurance (OASDI) has issued their 2022 annual report for the Social Security (OASI) and Social Security Disability (DI) Trust funds. This annual report is used to update Congress on the actuarial status and financial operations of the OASI and DI Trust Funds.
2021 marked the first time in 40 years that the total income to the Social Security Trust Fund was less than the total cost of benefits paid. The report also projects that benefit costs will exceed total income in all future years. The combined OASI and DI Trust Fund balances are projected to become depleted in 2035, and the OASI Trust Fund will be depleted in 2034. Both figures are a 1-year improvement over the 2021 Annual Report projections. The report projects that if no changes are made that once the OASI Trust Fund reserves are depleted, annual income each year after 2034 will be sufficient to pay 77% of promised benefits provided no changes are made. The annual income to the OASI Trust Fund includes payroll taxes for Social Security, taxation on Social Security benefits is paid into the OASI Trust Fund, and interest income earned in the OASI Trust Fund.
The news from the 2022 Trustees Report is not a surprise. The OASDI Board of Trustees has been signaling their expectation that the OASDI Trust fund will begin declining in value for several years. This year’s report also includes proposals for changes that could help cover future unfunded obligations for the OASDI Trust Fund. The Board of Trustees also recommends that changes be made sooner rather than later. The actuarial reports show that more significant changes will be necessary to maintain solvency if action is delayed. The recommended changes could include increases to payroll taxes, reductions in benefits, changes to full retirement ages, other smaller changes, or a combination of these changes.
A separate report with a summary of potential changes for the Social Security Program is available for review. The actuaries for the Social Security Administration look at several categories of changes that could be made with the Social Security program and calculate the percentage of the shortfall each strategy could eliminate.
The 2022 Annual Report shares that the OASDI program provided benefit payments to about 65 million people: 50 million retired workers and dependents of retired workers, 6 million survivors of deceased workers, and 9 million disabled workers and dependents of disabled workers. During the year, an estimated 179 million people had earnings covered by Social Security and paid payroll taxes on those earnings. The program’s total cost in 2021 was $1,145 billion, and its total income was $1,088 billion, consisting of $1,018 billion in non-interest income and $70 billion in interest earnings. Asset reserves held in special issue U.S. Treasury securities declined from $2,908 billion at the beginning of the year to $2,852 billion at the end of the year.