On March 31, the Social Security Trustees released their annual report on the current and projected financial status of the Social Security trust funds. The 2023 Trustees Report highlights that our Social Security system continues to operate well for the American people. Our Social Security system’s financial outlook remains stable and can continue to pay all scheduled old age, survivors, and disability benefits until 2034.

The 2023 Trustees Report finds that Social Security is fully solvent until 2034 looking at the combined Trust Funds but faces a moderate long-term shortfall for the Old Age and Survivors (OASI) program, which can fully pay benefits until 2033 on its own, one year sooner than last year. If nothing is done to ensure the solvency of the OASI program before that time, the program would still be able to pay 77 percent of promised benefits to survivors and retirees.

Other highlights of the current financial status of the Trust Funds include:

• At the end of 2022, the OASDI program was providing benefit payments to about 66 million people: 51 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 181 million people had earnings covered by Social Security and paid payroll taxes on those earnings.
• The total cost of the program in 2022 was $1,244 billion. Total income was $1,222 billion, which consisted of $1,115 billion in non-interest income and $66 billion in interest earnings.
• Asset reserves held in special issue U.S. Treasury securities declined from $2,852 billion at the beginning of the year to $2,830 billion at the end of the year.
• The reserves of the combined OASI and DI Trust Funds along with projected program income are sufficient to cover projected program cost over the next 10 years under the intermediate assumptions.
• The ratio of reserves to annual cost is projected to decline from 204 percent at the beginning of 2023 to 96 percent at the beginning of 2029. Because this ratio falls below 100 percent by the beginning of the 10th projection year, the combined OASI and DI Trust Funds fail the Trustees’ test of short-range financial adequacy.
• Considered separately, the OASI Trust Fund fails this test, but the DI Trust Fund satisfies the test. For last year’s report, the Trustees projected combined reserves would be 211 percent of annual cost at the beginning of 2023 and 57 percent at the beginning of 2032.
• The projected reserve depletion years were 2035 for OASDI, 2034 for OASI, and 2096 for DI in last year’s report. The level of DI reserves is very sensitive to changes in program cash flows and interest.

The Trustees Report also included excellent news for the disability program. For the second year in a row, the Trustees project that Social Security’s Disability Insurance (DI) trust fund by itself can pay all scheduled benefits throughout the entire 75-year period covered by the Trustees estimates.

Prior to last year, the last time SSDI was fully funded for the entire projection period was in 1983. This is in part due to the temporary reallocation of payroll taxes from the OASI Trust Fund to the DI Trust passed by Congress in 2015. NOSSCR advocated vigorously for this reallocation and the current fiscal status of the program means that there is no concern of benefit cuts in the disability program for the foreseeable future, unless Congress acts to make program changes.

The Trustees Report includes the following additional information regarding the DI program:

• The DI program continues to have low levels of disability applications and benefit awards for 2022.
• Disability applications have declined substantially since 2010, and the total number of disabled-worker beneficiaries in current payment status has been falling since 2014.
• The Trustees assumed for this report that disability applications will continue to rise gradually from current low levels, resulting in a rise in the age-sex-adjusted disability incidence rate to an ultimate rate of 4.8 per thousand exposed by the end of the short-range projection period, the same as last year but lowered from 5.0 per thousand assumed for the 2021 report.

As you know, Congress is considering ways to make sure that the OASDI program is fully solvent throughout the 75-year window given this coming funding shortfall.

The Trustees Report indicates that:

“to remain fully solvent throughout the 75-year projection period ending in 2097: (1) revenue would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 3.44 percentage points to 15.84 percent beginning in January 2023; (2) scheduled benefits would have to be reduced by an amount equivalent to an immediate and permanent reduction of 21.3 percent applied to all current and future beneficiaries effective in January 2023, or 25.4 percent if the reductions were applied only to those who become initially eligible for benefits in 2023 or later; or (3) some combination of these approaches would have to be adopted. If substantial actions are deferred for several years, the changes necessary to maintain Social Security solvency would be concentrated on fewer years and fewer generations. Significantly larger changes would be necessary if action is deferred until the combined trust fund reserves become depleted in 2034.”

As urged by the Trustees Report, NOSSCR supports acting sooner rather than later to ensure the 75-year solvency of the Social Security programs.