Figure 1 shows Social Security’s income and cost rates over the next 75 years as reported in the 2020 Trustees Report. The average income rate did not change at all and the cost rate rose a tiny bit, leading to a slight increase in the 75-year deficit from 3.21% to 3.28% of taxable payrolls.
These new numbers will replace the intermediate projections in the 2020 Trustees Report as the baseline for evaluation of legislative proposals until the next Trustees Report is issued in the spring.
The most alarming of all this new data is the depletion date for the trust fund. It has always been known that the trust fund was scheduled to run out of money. The problem is that, whereas we used to have 65 years to figure out what to do once the trust fund was depleted, with the 2020 Trustees Report’s projected depletion date of 2035, the number dropped to 15 years.
Once the trust fund reserves are depleted, the payroll tax produces enough revenue only to pay 75% to 80% of promised benefits. The new Social Security projections move the depletion date from 2035 to 2034, and the time for finding a solution drops to 13 years.