Social Security
Goodbye to full Social Security benefits: SSA reveals when funds will run out
According to the Social Security Board of Trustees, the trust funds for paying full benefits will run out in a few years. Here’s what you need to know.
The Social Security Administration is preparing to send out increased payments for 2025. Thanks to the cost-of-living adjustment, benefits for retirees, survivors, Social Security Disability Insurance and Supplemental Security Income will rise by 2.5% next year.
The government agency calculates the COLA based on inflation to avoid affecting the purchasing power of beneficiaries, so payments generally increase each year.
However, in a few years, Social Security may no longer be able to make such adjustments nor send full monthly benefits to its recipients.
The Social Security Board of Trustees earlier this year released its annual report on the financial status of the Social Security Trust Funds and found that the Social Security and Medicare programs continue to face significant funding problems, which, if not resolved, could result in incomplete payments in the near future.
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Social Security reveals when funds for benefit payments will run out
According to the latest estimates, the Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100% of benefits only through 2033.
Once the fund’s reserves are depleted, the program’s ongoing revenues will be enough to pay only 79% of benefits. Meanwhile, the Disability Insurance (DI) Trust Fund will be able to pay 100% of total scheduled benefits through at least 2098.
In addition, the Hospital Insurance (HI) Trust Fund, which includes Medicare, will be able to pay 100% of total scheduled benefits through 2036. Once that fund’s reserves are depleted, the program’s ongoing revenues will only be enough to pay 89% of total benefits.
There are no funding issues for the Supplementary Medical Insurance (SMI) Trust Fund, as its main sources of funding are the premiums of enrolled beneficiaries and associated federal contributions from the Treasury.
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This could help prevent Social Security funds from running out
Lawmakers in Congress have several options to make changes that can reduce or eliminate financial deficits in the long run. Although the funds are still several years away from running out, it is important for the government to begin implementing measures to prevent this from happening.
Possible actions to address the budget deficit include raising the payroll tax rate, increasing wages subject to Social Security contributions, raising the full retirement age, or reducing annual cost-of-living adjustments.
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