"Social Security" and "good news" rarely appear in the same sentence these days. There's a lot of understandable concern about the program's diminishing buying power and its longevity.
But the recently released 2024 Social Security Trustees Report brought some positive updates for anyone expecting to depend heavily on the program's benefit checks.
Last year's report indicated the combined Social Security trust funds would be depleted in 2034. But this year's data suggests the program has a little more time before exhausting its reserves. Here's what that means for seniors and workers hoping to claim benefits in the future.
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Social Security's trust funds will last until 2035
The latest trustees report estimates the combined Social Security trust funds will last until 2035, one year longer than the previous projection. At this point, it would be able to pay out 83% of scheduled benefits if the government made no changes to the program. This is also slightly higher than the 80% the 2023 report estimated the program could pay after the funds' depletion.
But talking about the combined trust funds can be confusing because it implies all the money is used for the same purpose, and it's not. There are two Social Security trust funds:
- The Old Age and Survivors Insurance (OASI) trust fund: This pays benefits to retired workers, their spouses and children, and surviving family members of deceased workers.
- Disability Insurance (DI) trust fund: This pays benefits to disabled workers and their family members.
The outlooks for these two trust funds are very different. The DI trust fund is in decent shape. It's not expected to be depleted at any point in the next 75 years. This is due in part to the fact that Social Security disability applications have declined substantially since 2010.
It's the OASI trust fund that's struggling. This is projected to be depleted in 2033 -- an assumption that remains unchanged from last year. If this happens, seniors and their families would only get 79% of their scheduled benefits going forward. Again, this is a little more optimistic than the 77% the 2023 trustees report predicted these recipients will get once the OASI trust fund is depleted.
Social Security has been in this situation before. In 1982, the OASI trust fund was nearly depleted, but Congress enacted emergency legislation that let the program borrow money from other federal trust funds to make up the shortfall. It's possible the government could do that again to pay OASI benefits as scheduled for a while longer, but this won't work indefinitely.
What Social Security's trust fund shortfall means for seniors and workers
A long-term fix for Social Security's solvency issues must come from legislation, and many members of Congress have already put forward ideas. So far, nothing has gained a lot of traction, but you can bet this will become a bigger focus as the country nears the trust funds' estimated depletion date.
Ideas fall into one of two camps: raising funding or cutting benefits for some or all recipients. There are several ways to accomplish each:
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Ways to Cut Benefits |
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Again, nothing's been decided yet, and the actual solution will likely require more than one strategy. If you have strong feelings about what should or shouldn't happen with Social Security, reach out to your representatives in Congress and make your feelings known.
Beyond that, Americans have to wait and focus on what they can actually control. Possible benefit cuts or increased taxes make it even more important to save what you're able to for retirement right now. The more savings you have, the less affected you'll be by whatever happens with Social Security.
Those already claiming Social Security could consider full- or part-time employment to supplement their monthly checks if they're able to do so. Working while claiming Social Security could potentially increase your checks over the long term if you're earning more now than you did in your younger years or if you initially applied for Social Security before you had 35 years of work history.
Workers who haven't applied for Social Security yet can make their checks go further by timing their application well. Generally, those with short life expectancies and those without other sources of retirement income do better by applying early. Those with the means to delay and longer life expectancies get more money by waiting to sign up for benefits because every month you delay benefits increases your checks slightly until you reach 70.
But everyone's biggest potential asset in this situation is flexibility. Changes are coming, and when they arrive, you'll almost certainly have to adapt your Social Security claiming strategy. Staying up to date on any changes and how they could affect you will help you figure out the best way forward.
