Everyone has heard about the financial threats that plague the Social Security program. Every year, the trustees of the Social Security Trust Fund are supposed to issue an annual report on the current and projected financial status of the Social Security program. Yet this year, the 2014 Social Security Trustees Report is late, and there are no signs of when the annual report might be available. Should Social Security recipients be concerned? Let's take a closer look.
How late is the 2014 Social Security Trustees Report?
The due date of the Social Security Trustees Report is set forth specifically in the law setting up the Social Security Trust Fund. As commentator Bruce Webb noted earlier this week, according to Section 201(c)(2) of the Social Security Act, the duties of the Board of Trustees include making a "[r]eport to the Congress not later than the first day of April of each year on the operation and status of the Trust Funds during the preceding fiscal year and on their expected operation and status during the next ensuing five years."
As recently as 2008, the Social Security Trustees have managed to get their report out on time in compliance with the statute. In 2005 and before, the Social Security Trustees Report routinely came out in late March, getting in just under the April 1 deadline .
But the Social Security Trustees have routinely ignored the statutory guidelines governing the release of their annual report. Last year, the Social Security Trustees Report's letter of transmittal to Congress was dated May 31. That was much later than the 2012 report, which was referred to the Ways and Means Committee on April 25, and the 2011 report, which carried a date of May 13.
But the 2014 Social Security Trustees Report has a long way to go before it would be the latest ever. In 2010, the report didn't come out until August 9.
Should you be worried?
Even if the 2014 Social Security Trustees Report ends up coming out even later than past years, it doesn't necessarily indicate that the news will be particularly bad. In 2010, for instance, the Trustees concluded that the date at which the Social Security Trust Fund would be exhausted -- 2037 -- would remain the same as the previous year's report had asserted. Since then, even though the reports have been closer to timely, the reduction in employment and the low interest rates on the government securities that the Trust Fund owns has pulled the year the Trust Fund is projected to run out of money forward to 2033.
Over the past year, most of the factors that led the Social Security Trustees to keep their predictions stable in 2013 seem to have remained largely the same. Interest rates have remained relatively low, although a mid-year bump might have led to slightly higher returns for the Social Security Trust Fund. On the employment front, unemployment rates have continued to fall, and job growth has finally gotten the employment market back to its pre-recession levels. More people earning wages subject to Social Security taxes could slightly boost the financial status of the program, although year-to-year changes in payrolls have only a minimal impact on the long-term viability of Social Security.
What to expect
Despite the delay in the 2014 Social Security Trustees Report, you're likely to see similar challenges to the program's future. Although fears that the program will disappear are unfounded, the potential for reduced benefits exists for those expecting to receive Social Security beyond the next couple of decades.
In a hotly contested midterm election year, though, the political situation makes it highly unlikely that anyone will want to propose substantial changes to Social Security, which remains a polarizing hot-button issue that many see as political dynamite. The longer lawmakers take before taking action to shore up Social Security -- whether through changes to benefits or tax revenue to pay them -- the more extreme the measures they'll have to use in the future.