Social Security’s $2.7 trillion surplus could be gone by 2033 as millions of baby boomers flood the agency with applications for benefits, and the problem was seen nearly three decades ago.
During that time, Social Security produced its biggest surplus to date by collecting more in taxes from workers than it paid in benefits to retirees, disabled workers, spouses and children.
In fact, the surpluses also helped mask the size of the budget deficit being generated by the rest of the federal government.
However, since 2010, Social Security has been paying out more in benefits than it collects in taxes, adding to the urgency for Congress to address the program’s long-term finances.
“To me, urgent doesn’t begin to describe it,” said Chuck Blahous, one of the public trustees who oversee Social Security. “I would say we’re somewhere between critical and too late to deal with it.”
The Social Security trustees project the surplus will be gone in 2033. Unless Congress acts, Social Security would only collect enough tax revenue each year to pay about 75 percent of benefits, triggering an automatic reduction.
Lawmakers from both political parties say they want to avoid such a dramatic benefit cut for people who have retired and might not have the means to make up the lost income. Still, that scenario is more than two decades away, which is why many in Congress are willing to put off changes.
But once the surplus is spent, the annual funding gaps start off big and grow fast, which could make them hard to rein in if Congress procrastinates.
The projected shortfall in 2033 is $623 billion, according to the trustees’ latest report.