The Future of the Social Security Trust Funds

The Social Security Administration (SSA) pays all benefits out of two trust funds, the Old Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. The two are usually treated as a combined entity.

By law, the SSA’s Board of Trustees, a group of six people (the Secretaries of Labor, Treasury, Health and Human Services, the Commissioner of Social Security, and two representatives of the public), is required to submit to Congress an annual report on the health of the SSA’s dual Trust Funds.

The Board’s 2015 report closely resembled the 2014 report. According to the 2015 findings, the combined Trust Funds will be fully solvent until 2034. If no action is taken by that point, they will still be able to pay benefits, but at a reduced rate of 79%, by using incoming payroll tax revenue.

The DI Trust Fund is in more immediate need, as the report projected that its reserves would be depleted in late 2016. Even if Congress takes no action by then, the DI Trust Fund will still be able to pay about 81% of scheduled benefits using incoming payroll taxes.

In the past, Congress has remedied funding shortages by allowing inter-trust fund borrowing and by altering the percentage of incoming payroll tax revenues directed to each trust fund.

Permanently combining the Trust Funds would be another solution to the DI Trust Fund’s short-term funding issues, and in fact, in July of 2015, Rep. Xavier Becerra (D-CA) introduced legislation designed to do so.