2022 Social Security Trustees Report

[USGrant1962]

The 2022 report was issued today - bottom line is the forecasted depletion of the Trust fund moved out a year from 2033 to 2034. I believe they have also adjusted the projected ongoing deficit to 20% from 23%.

Conclusion
Under the intermediate assumptions, the projected hypothetical combined
OASI and DI Trust Fund asset reserves become depleted and unable to pay
scheduled benefits in full on a timely basis in 2035. At the time of depletion
of these combined reserves, continuing income to the combined trust funds
would be sufficient to pay 80 percent of scheduled benefits. The OASI Trust
Fund reserves are projected to become depleted in 2034, at which time OASI
income would be sufficient to pay 77 percent of OASI scheduled benefits. DI
Trust Fund asset reserves are not projected to become depleted during the
75-year period ending in 2096.

See https://www.ssa.gov/oact/TR/2022/tr2022.pdf

and

https://www.ssa.gov/oact/TR/2022/index.html

 

[Dtail]

So now some of the conservative users of Firecalc can change their SS expected % from zero to ......zero.

 

[USGrant1962]

So now some of the conservative users of Firecalc can change their SS expected % from zero to ......zero.

I am actually considering changing my SS haircut from 25% to 20% in my FIRECalc model.

 

[Telly]

Since the OASI and DI trust funds are separate books, wouldn't the Intermediate Assumption haircut in 2034 for OASI be 23%, not 20%?
Or am I misunderstanding something?

I read it as the 80% funding (20% haircut) was for the fictitious "combined" OASI and DI.

I, and I would think the majority of Early and Early-Early retirees are/will soon be ineligible for DI, having been out of work for more than the 10 years of no-working limitation on eligibility for DI. I got my letter from the SSA on that years ago.

Thanks for posting it, USG1962!

 

[SecondCor521]

Since the OASI and DI trust funds are separate books, wouldn't the Intermediate Assumption haircut in 2034 for OASI be 23%, not 20%?
Or am I misunderstanding something?

I read it as the 80% funding (20% haircut) was for the fictitious "combined" OASI and DI.

Your understanding matches my own.

Elsewhere nearby in the report it says that the combined numbers are essentially fiction because they're separate by law. The only reason I can imagine that they report combined numbers is as a hint to lawmakers who could legislatively transfer assets from the DI to OASI if the former was overfunded and the latter was underfunded.

 

[Koolau]

I've said this before in a different context. At age 75, I worry less about 2035 than many Early Retirees.

Of course, the open secret about SS is that there's no actual money available to pay even today's SS recipients. The system has to cash IOU's (treasury bonds pledged against SS money taken to run the country years ago.) Now, even those IOUs are running out, I guess.

 

[USGrant1962]

Since the OASI and DI trust funds are separate books, wouldn't the Intermediate Assumption haircut in 2034 for OASI be 23%, not 20%?
Or am I misunderstanding something?

I read it as the 80% funding (20% haircut) was for the fictitious "combined" OASI and DI.

...

Oops, you are correct, I read the summary too quickly. So the OASI haircut is unchanged except it hits a year later.

 

[G-Man]

Oops, you are correct, I read the summary too quickly. So the OASI haircut is unchanged except it hits a year later.

Not sure what all this mean. I hope Social Security is still available in 11 years when I turn 67. Social security income is one of the sources of income for me when I retire.

 

[SecondCor521]

Oops, you are correct, I read the summary too quickly. So the OASI haircut is unchanged except it hits a year later.

I thought it went from 76% to 77%, but that's probably a nit.

 

[pb4uski]

I've said this before in a different context. At age 75, I worry less about 2035 than many Early Retirees.

Of course, the open secret about SS is that there's no actual money available to pay even today's SS recipients. The system has to cash IOU's (treasury bonds pledged against SS money taken to run the country years ago.) Now, even those IOUs are running out, I guess.

The whole IOU thing is a disingenuous hoax. The SS Trust Fund surplus is really a special series of US Treasuries that are not available to the public, so there are actual assets available... just like a pension plan might own US Treasuries. When the SS Trust Fund wants to redeem some of its investments, the general fund will simply issue US Treasuries to the public and use the proceeds to redeem the special series US Treasuries owned by the SS Trust Fund.

So to the extent that these are IOUs, the i-bonds that we all are buying and all other US Treasury securities (bills, bonds, etc.) that we are buying are also IOUs.

What happened is that over the years the general fund borrowed money from the SS Trust Fund and it effectively reduced the amount of US government debt that had to be issued to the public... the SS Trust Fund investing its surplus in US Treasuries is no different than a pension fund buying US Treasuries to back its pension liabilities (which is not at all uncommon).

The trust fund reserve peaked in 2020 at $2.9 trillion and is currently $2.8 trillion.

 

[USGrant1962]

I thought it went from 76% to 77%, but that's probably a nit.

From the 2021 summary:

• The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, will be able to pay scheduled benefits on a timely basis until 2034, one year later than reported last year. At that time, the fund's reserves will become depleted and continuing tax income will be sufficient to pay 77 percent of scheduled benefits.

 

[JDARNELL]

Just make the printers go BRRR and use your military against any country that complains. Sound familiar?

 

[Koolau]

The whole IOU thing is a disingenuous hoax. The SS Trust Fund surplus is really a special series of US Treasuries that are not available to the public, so there are actual assets available... just like a pension plan might own US Treasuries. When the SS Trust Fund wants to redeem some of its investments, the general fund will simply issue US Treasuries to the public and use the proceeds to redeem the special series US Treasuries owned by the SS Trust Fund.

So to the extent that these are IOUs, the i-bonds that we all are buying and all other US Treasury securities (bills, bonds, etc.) that we are buying are also IOUs.

What happened is that over the years the general fund borrowed money from the SS Trust Fund and it effectively reduced the amount of US government debt that had to be issued to the public... the SS Trust Fund investing its surplus in US Treasuries is no different than a pension fund buying US Treasuries to back its pension liabilities (which is not at all uncommon).

The trust fund reserve peaked in 2020 at $2.9 trillion and is currently $2.8 trillion.

Uh, I actually know all this. My point: The money collected for SS WAS indeed spent for other stuff and the only thing in the "SS lock box" is IOUs (yes, they're treasury notes of some kind). So, now "we" (The USA and it's people) have to come up with the cash (or different IOUs) to redeem the notes so SS can be paid. That's not a disingenuous hoax - and it leads to inflation eventually. With interest rates rising (quickly now) "we" will have to borrow (or print) the money to meet SS demand. The cost to borrow the money will be higher than recently. It also adds to the money supply (aka inflation.)

You can say it's all out of the same pot, but the real "hoax" is that the impression given the public is that their SS money is "saved" for their SS payments. Instead it's spent and covered with an IOU that could be problematic in the future as mentioned above.

If you don't think it's a hoax, try this type of accounting for say, a personal loan. Borrow 10K from a bank and pledge collateral as a loan from another bank. MMMMMMPPPPPP! YMMV

 

[MichaelB]

Uh, I actually know all this. My point: The money collected for SS WAS indeed spent for other stuff and the only thing in the "SS lock box" is IOUs (yes, they're treasury notes of some kind). So, now "we" (The USA and it's people) have to come up with the cash (or different IOUs) to redeem the notes so SS can be paid. That's not a disingenuous hoax - and it leads to inflation eventually. With interest rates rising (quickly now) "we" will have to borrow (or print) the money to meet SS demand. The cost to borrow the money will be higher than recently. It also adds to the money supply (aka inflation.)

You can say it's all out of the same pot, but the real "hoax" is that the impression given the public is that their SS money is "saved" for their SS payments. Instead it's spent and covered with an IOU that could be problematic in the future as mentioned above.

If you don't think it's a hoax, try this type of accounting for say, a personal loan. Borrow 10K from a bank and pledge collateral as a loan from another bank. MMMMMMPPPPPP! YMMV

Not a hoax. The contribution to SS is not spent, it is loaned, from the SSA to the general account. Just like your bank account. You deposit the money, the bank gives you an IOU and lends that money to someone else. When that loan recipient spends the money, it’s not the same as you spending. Your IOU will be redeemed based on the conditions of the deposit agreement.

The key here is once you deposit thr money in your bank account it is no longer yours. All you have is an IOU. This is the way our financial system works, and YMM does not V, it’s the same for everyone.

 

[SecondCor521]

From the 2021 summary:

Thanks for the correction. My notes must have been wrong.

 

[pb4uski]

Uh, I actually know all this. My point: The money collected for SS WAS indeed spent for other stuff and the only thing in the "SS lock box" is IOUs (yes, they're treasury notes of some kind). So, now "we" (The USA and it's people) have to come up with the cash (or different IOUs) to redeem the notes so SS can be paid. That's not a disingenuous hoax - and it leads to inflation eventually. With interest rates rising (quickly now) "we" will have to borrow (or print) the money to meet SS demand. The cost to borrow the money will be higher than recently. It also adds to the money supply (aka inflation.)

You can say it's all out of the same pot, but the real "hoax" is that the impression given the public is that their SS money is "saved" for their SS payments. Instead it's spent and covered with an IOU that could be problematic in the future as mentioned above.

If you don't think it's a hoax, try this type of accounting for say, a personal loan. Borrow 10K from a bank and pledge collateral as a loan from another bank. MMMMMMPPPPPP! YMMV

Sure the money was spent by the general fund on other stuff, but were it not for the SS Tust Fund investing in that special series of US Treasury securities then the money would have just been raised from the public by selling different US Treasury securities.

What would you have done? Have the SS Trust Fund stuff $2.9 trillion under a non-interest bearing mattress until was needed?

The world covets US Treasury securities and will eagerly buy them so it is ignorant to claim that the burden is on "the USA and its people".

The government has consistently included the special series of US Treasuries issued to the SS Trust Fund in the total of the government debt... nothing has been hidden. We'll just be replacing one form of US government debt with another... all else being equal the total debt doesn't change an iota.

 

[Chuckanut]

From an article in today's WSJ on the latest SS report:

People are also seeking the program’s disability payments at a lower rate.

The administration officials said that higher payroll-tax revenue from rising wages and labor growth is keeping up with the higher costs, though, meaning that inflation is having a largely neutral impact on the program’s finances.

Social Security consists of two programs, one for retirees and the other for people who claim disability benefits. The retirement program’s trust fund alone is projected to last until 2034, while the disability program’s trust fund is now forecast to cover benefits through the 75-year projection window in 2096. Last year’s report estimated the disability fund would run out in 2057.

 

[lucky penny]

Thanks for those interesting highlights, Chuck.

 

[jimbee]

The whole IOU thing is a disingenuous hoax. The SS Trust Fund surplus is really a special series of US Treasuries that are not available to the public, so there are actual assets available... just like a pension plan might own US Treasuries. When the SS Trust Fund wants to redeem some of its investments, the general fund will simply issue US Treasuries to the public and use the proceeds to redeem the special series US Treasuries owned by the SS Trust Fund.

So to the extent that these are IOUs, the i-bonds that we all are buying and all other US Treasury securities (bills, bonds, etc.) that we are buying are also IOUs.

What happened is that over the years the general fund borrowed money from the SS Trust Fund and it effectively reduced the amount of US government debt that had to be issued to the public... the SS Trust Fund investing its surplus in US Treasuries is no different than a pension fund buying US Treasuries to back its pension liabilities (which is not at all uncommon).

The trust fund reserve peaked in 2020 at $2.9 trillion and is currently $2.8 trillion.

Thank you...

Not a hoax. The contribution to SS is not spent, it is loaned, from the SSA to the general account. Just like your bank account. You deposit the money, the bank gives you an IOU and lends that money to someone else. When that loan recipient spends the money, it’s not the same as you spending. Your IOU will be redeemed based on the conditions of the deposit agreement.

The key here is once you deposit thr money in your bank account it is no longer yours. All you have is an IOU. This is the way our financial system works, and YMM does not V, it’s the same for everyone.

...thank you...

Sure the money was spent by the general fund on other stuff, but were it not for the SS Tust Fund investing in that special series of US Treasury securities then the money would have just been raised from the public by selling different US Treasury securities.

What would you have done? Have the SS Trust Fund stuff $2.9 trillion under a non-interest bearing mattress until was needed?

The world covets US Treasury securities and will eagerly buy them so it is ignorant to claim that the burden is on "the USA and its people".

The government has consistently included the special series of US Treasuries issued to the SS Trust Fund in the total of the government debt... nothing has been hidden. We'll just be replacing one form of US government debt with another... all else being equal the total debt doesn't change an iota.

...thank you...

Uh, I actually know all this. My point: The money collected for SS WAS indeed spent for other stuff and the only thing in the "SS lock box" is IOUs (yes, they're treasury notes of some kind). So, now "we" (The USA and it's people) have to come up with the cash (or different IOUs) to redeem the notes so SS can be paid. That's not a disingenuous hoax - and it leads to inflation eventually. With interest rates rising (quickly now) "we" will have to borrow (or print) the money to meet SS demand. The cost to borrow the money will be higher than recently. It also adds to the money supply (aka inflation.)

You can say it's all out of the same pot, but the real "hoax" is that the impression given the public is that their SS money is "saved" for their SS payments. Instead it's spent and covered with an IOU that could be problematic in the future as mentioned above.

If you don't think it's a hoax, try this type of accounting for say, a personal loan. Borrow 10K from a bank and pledge collateral as a loan from another bank. MMMMMMPPPPPP! YMMV

...and PLONK! Tired of this nonsense.

 

[Luvtoride]

Go broke date for SS Medicare pushed back

Some good news…

https://asburyparkpress-nj.newsmemory.com/?publink=0e3497e15_13484e0

This comes up very so often, but it’s hard to imagine that the government would ever let these social support programs ever go broke.
I feel sorry for our kids and grandkids who will have to foot the bill to “bail out” the systems for us.

 

[REWahoo]

Here's the Executive Summary:

The annual Social Security and Medicare trustees report released Thursday says Social Security’s trust fund will be unable to pay full benefits beginning in 2035, instead of last year’s estimate of 2034. The year before that it estimated an exhaustion date of 2035.

The projected depletion date for Medicare’s trust fund for inpatient hospital care moved back two years to 2028 from last year’s forecast of 2026.

 

[MichaelB]

Threads merged

 

[pb4uski]

Some good news…

https://asburyparkpress-nj.newsmemory.com/?publink=0e3497e15_13484e0

This comes up very so often, but it’s hard to imagine that the government would ever let these social support programs ever go broke.
I feel sorry for our kids and grandkids who will have to foot the bill to “bail out” the systems for us.

I'm not sure if you understand what going "broke" realy means. It DOES NOT mean that benefits would stop, but unless Congress makes changes to the program then it means that benefits would be reduced about 25%... likely across-the-board... so if you are a SS recipient and receive $1,000/month then it would be haircut to $750/month. In that case, there would be no bill for our kids or grandkids to foot to bail out the system.

If Congress makes changes to the system so more than 75% of benefits can be paid out, then it will likely be a combination of things impacting current and future participants.

 

[ncbill]

I'm not sure if you understand what going "broke" realy means. It DOES NOT mean that benefits would stop, but unless Congress makes changes to the program then it means that benefits would be reduced about 25%... likely across-the-board... so if you are a SS recipient and receive $1,000/month then it would be haircut to $750/month. In that case, there would be no bill for our kids or grandkids to foot to bail out the system.

If Congress makes changes to the system so more than 75% of benefits can be paid out, then it will likely be a combination of things impacting current and future participants.

I very much doubt it will be across-the-board.

SS is a very progressive system with its first & second bend points with few additional earnings credited past that second bend point.

Remember, those with higher income in retirement are already taxed on 85% of their SS benefit.

SS has become more like they entitlement program it is in actuality versus the fiction of being strictly an insurance plan.

Those receiving higher benefits are the most likely to see a 25% (or more) reduction in their SS check...e.g. $3,000 instead of $4,000.

Those who never exceeded their first bend point may see something closer to a 5% reduction, if anything.

 

[Turbo29]

If you don't think it's a hoax, try this type of accounting for say, a personal loan. Borrow 10K from a bank and pledge collateral as a loan from another bank. MMMMMMPPPPPP! YMMV

It's like someone putting some cash in a wall safe for their new car fund every payday and then immediately taking the same cash out so they can go to dinner and throwing an IOU in the safe to replace the cash.