The scheduled depletion date for Social Securitys Disability Insurance Trust Fund is only two years away, in late 2016, according to a new government report.
The report, from the Social Security and Medicare Boards of Trustees, found that, taken in combination, Social Securitys retirement and disability programs have dedicated resources sufficient to cover benefits for the next 19 years, until 2033. However, the projected depletion date for the separate Social Securitys Disability Insurance Trust Fund is in late 2016.
The Treasury Department noted that the Medicare Hospital Insurance Trust Fund will have sufficient funds to cover its obligations until 2030, four years later than was projected last year, and 13 years later than was projected in the last report issued prior to passage of the Affordable Care Act.
Taken in combination, Social Securitys retirement and disability trust fund reserves are projected to be exhausted in 2033, the same year projected in last years Trustees Report. After trust fund exhaustion, annual revenues from the dedicated payroll tax will be sufficient to fund three-quarters of scheduled benefits through 2088.
Social Securitys Disability Insurance program faces the most immediate financing shortfall of any of the separate trust funds. The DI Trust Fund reserves are projected to be depleted in late 2016, which is also unchanged from last years estimate, after which time dedicated revenues are projected to cover about 80 percent of scheduled benefit payments. The Treasury warned that legislation will be needed from Congress to address this financial imbalance.
The Trustees Reports underscore the importance of making reforms to Social Security and Medicare, said Treasury Secretary Jacob Lew. As the largest generation in American history enters retirement, the pressure on our social insurance programs is growing, and we must make manageable changes now so we do not have to make drastic changes later. The President is committed to putting Social Security and Medicare on a stronger footing, and he has put forward achievable plans to fix their finances. As he has consistently demonstrated, the President is ready to work with Congress to usher in responsible reforms, and he is prepared to make tough choices. But the President will not support any proposal that would hurt Americans who depend on these programs today, and he will not support any effort that slashes benefits for future retirees.
Lew urged policy makers of both parties to focus on creating serious solutions to the problem.
Michael Cohn is editor-in-chief for accountingtoday.com
