Treasury says Social Security Fund will be able to pay benefits for a year longer than expected
The Social Security trust funds most Americans rely on for their retirement will be able to continue paying benefits on time until 2034, a year later than the Treasury Department estimated last year, according to an updated report published Thursday afternoon by the government. ,
The improved analysis, signed by Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh, projects that the government’s disability insurance program will be able to pay full benefits over the next 75 years, the first time Social Security officials have issued such a rosy approach. has done. 1983 report.
Last year’s report estimated that the Disability Insurance Trust Fund would be exhausted in 2057. The government said Medicare Part A would remain fully funded until 2028, two years later.
US Treasury Secretary Janet Yellen takes off her mask during a hearing on the “Financial Stability Oversight Council’s Annual Report to Congress” at the beginning of the Senate Banking, Housing and Urban Affairs Committee, on Capitol Hill in Washington, US, May 10, 2022.
Elizabeth Frantz | Reuters
Yellen and Walsh explained that the better outlook for various funds is due to a faster and more robust economic recovery from the Covid-19 slowdown.
Yellen and Walsh wrote, “The main reason for the small deficit is the pandemic-induced slowdown, higher expected levels of labor productivity, and lower rates of future disability events, reflecting recent experience.”
“Changes were made to near-term economic data and assumptions that show that the recovery of jobs, earnings and GDP from the 2020 recession has been faster and stronger than projected in last year’s report, resulting in higher payroll tax receipts and income from Higher revenue has been achieved. Taxation of social security benefits,” the government said in a release.
The Treasury Department looks after two Social Security funds: the Old Age and Survivor Insurance and the Disability Insurance Trust Fund. The two programs were created to provide a source of income to former workers who have retired at the end of their careers and who cannot work due to disability, respectively.
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Despite revised estimates, and given broad demographic trends and the aging U.S. population, the fiscal outlook for Social Security, largely funded by payroll taxes, is grim without government intervention or material changes to the country’s tax code.
If Congress fails to act until the main Social Security trust fund is depleted, federal law would automatically cut benefit checks for retirees by about 20% across the board.
This could prove disastrous for many Americans who have budgeted and planned on that source of income for years, betting that their contributions through payroll taxes during their working years would ultimately be enough to provide for them in their retirement. Will come back for
The various funds serve as the pillars that sustain the retirement plans of millions of Americans and are among the most popular safety-net programs in America, with federally managed programs so popular that political strategists often refer to them as the “third rail” of American politics. ” They say. – Simply too dangerous to touch or lower.
“MPs have a number of policy options that will reduce or eliminate long-term funding shortfalls in Social Security and Medicare,” the government report said. “Taking action sooner rather than later will allow a wider range of solutions to be considered and provide more time to phase changes so the public has enough time to prepare.”
