Social Security to become insolvent in 10 years if ‘no legislative action’ taken, officials warn

The Social Security trust funds are projected to become insolvent over the next decade unless lawmakers take legislative action to save the health insurance program, says the latest report by the Social Security Board of Trustees.

If no action is taken, Social Security’s funds will be depleted by 2033 — one year earlier than the previous estimate, according to the report. These projections come as negotiations over next year’s budget remain stalled, and lawmakers remain split on how to fund the welfare program.

The Board of Trustees urges Congress to consider changes that would reduce or eliminate the long-term financing shortfalls for both Medicare and Social Security. With each year lawmakers fail to act, the public has less time to prepare for the changes, the board said.

The Board of Trustees released projections for several of Social Security’s trust funds over the next decade, predicting that all scheduled benefit payments will become insolvent by 2033. Social Security consists of four trust funds that pay beneficiaries, including Old-Age and Survivors Insurance, Disability Insurance, Hospital Insurance, and Supplementary Medical Insurance.

According to the latest report, the Old-Age and Survivors Insurance fund will become depleted and unable to pay out full benefits starting in 2033, which is one year earlier than projected in last year’s report. Social Security’s overall deficit is set to be depleted by 2034, with only 80% of scheduled payments being made at that time.

Last year’s projections were better than this year’s because the Board of Trustees revised GDP and labor productivity expectations over the next 10 years. Based on recent economic reports detailing inflation and U.S. economic output, the board predicts that these levels will decrease by 3%.

The most recent report is likely to play into lawmakers’ debate over the debt ceiling and the budget for the next fiscal year as both Democrats and Republicans have promised not to touch Social Security benefits as part of their proposed spending cuts.

Sens. Bill Cassidy (R-LA) and Angus King (I-ME) have formed a bipartisan group to address concerns with Social Security, framing its looming insolvency as an “existential threat” and “complicated math challenge.” The pair have requested a meeting with President Joe Biden repeatedly to talk about funding the program, but a discussion has not yet been scheduled.