Many of you are concerned that Social Security won’t remain a viable option in the future. Here’s the latest update.
Although the journalists won’t be writing about the 2018 Social Security (OASDI) trust fund results until the annual trustees’ report comes out in the spring, we have them for you now. The Social Security Administration has posted financial results for 2018 on this website.
In 2018, the program reported $1.003 trillion in income and $1.000 trillion in expenses, which increased the trust fund by $3 billion to $2.895 trillion. We can truthfully say the trust fund is still growing. But barely. Results were slightly better than what the trustees had projected for 2018. The system hasn’t yet gone into reverse.
It’s important to remember that trustees’ projections are not cast in stone; they are derived from certain assumptions that may or may not play out.
Morgan Stanley has published a research report suggesting that the trust fund could stay in the black until 2062, mainly due to productivity improvements as a result of the 78-million-strong Generation Z entering the workforce under good economic conditions. By joining up with the equally large Millennial generation, there should be plenty of money flowing into the system—enough to pay benefits to current retirees and shore up reserves for the future. And obviously there are others that disagree.
Meanwhile, Congress is finally starting to pay attention to Social Security. Of the many proposals that have been introduced to reform Social Security, the Social Security 2100 Act looks like it might go somewhere. This is a revival of a bill that was introduced in 2017. It contains several provisions that would both raise benefits and increase taxes, and would restore solvency over the next 75 years.
Under current law, the trust fund is expected to exhaust in 2034, after which benefits would be cut to 79% of current levels. Under the Social Security 2100 Act, the program would be solvent throughout the 75-year projection period and would be able to pay 100% of scheduled benefits on a timely basis for the foreseeable future.
Despite its popularity—it has more than 200 supporters in the House—it could face an uphill battle in the Senate. What I like about it is that it restores solvency without taking anything away from retirees. If this bill passes, all the generations can count on Social Security as a retirement resource and not feel that their 12.4% payroll tax is going into a black hole.
Regardless of what happens, you will still need to save and invest in order to maintain a comfortable lifestyle in retirement.
