Time is quickly running out to restore long-term solvency to Social Security, as evidenced in the latest long-term Social Security projections from the Congressional Budget Office (CBO). In a new insight, Director of Fiscal Policy Jordan Haring reviews CBO’s recently released long-term projections for Social Security.

Key points:

• CBO estimates that the Social Security Old-Age and Survivors Insurance (OASI) trust fund will exhaust its reserves by the end of fiscal year (FY) 2033, the Social Security Disability Insurance (SSDI) trust fund will run out by the end of calendar year 2064, and the theoretically combined Social Security trust funds (OASDI) will be insolvent by the end of 2034 – just 10 years from now.
• Upon insolvency of the OASI trust fund, all beneficiaries regardless of age, income, or need will see their benefits slashed by 25 percent, SSDI benefits will be cut by 13 percent, and OASDI benefits by 23 percent; CBO estimates that 75-year solvency could be restored to the combined trust funds with an immediate 31-percent payroll tax increase or a 24- percent across-the-board benefit cut.
• Social Security’s 75-year (2024–2098) actuarial imbalance totals 4.3 percent of taxable payroll (1.5 percent of gross domestic product (GDP)); 75-year program costs equal 18.1 percent of payroll (6.2 percent of GDP) and dedicated revenue totals 13.8 percent of payroll (4.7 percent of GDP).
• Policymakers have just a few years left to restore solvency to Social Security and prevent big benefit cuts for all beneficiaries; the longer they wait, the more costly and painful the necessary adjustments will be.

Read the analysis