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No change in solvency of Social Security - broke by 2042

March 23, 2004 - The 2004 Social Security Trustees Report released today shows little change in the projected financial status of the Social Security program over last year. And again this year, the Social Security Board of Trustees states that, absent changes, Social Security’s currently scheduled benefits are not sustainable over the long term and the Trust Fund will be broke in 2042.

In the 2004 Annual Report to Congress, the Trustees announced:

• The projected point at which tax revenues will fall below program costs comes in 2018 -- the same as the estimate in last year’s report.

• The projected point at which the Trust Funds will be exhausted comes in 2042 -- also the same as the estimate in last year’s report.

• The projected actuarial deficit over the 75-year long-range period is 1.89 percent of taxable payroll.

• Over the 75-year period, the Trust Funds require additional revenue equivalent to $3.7 trillion in today’s dollars to pay all scheduled benefits. This unfunded obligation grew $200 billion from last year.

“I want to assure those already receiving Social Security benefits – as well as those who are close to retirement – that your benefits are secure,” said Jo Anne Barnhart, Commissioner of Social Security. “Reaching agreement on an appropriate solution to Social Security’s long-term financing challenges will require Congress and the President working together in a bipartisan manner.”

Other highlights of the Trustees Report include:

• Income to the combined Old-Age and Survivors, and Disability Insurance (OASDI) Trust Funds amounted to $632 billion in 2003.

• During the year, an estimated 154 million people had earnings covered by Social Security and paid payroll taxes.

• The Trust Funds paid benefits of more than $470 billion in calendar year 2003. There were 47 million beneficiaries at the end of the calendar year.

• The cost of $4.6 billion to administer the program continues to be a very low 0.7 percent of total income.

• Total expenditures from the combined OASDI Trust Funds amounted to $479 billion in 2003.

• The assets of the combined OASDI Trust Funds increased by $153 billion in 2003 to a total of $1.5 trillion.

• Interest earned on the invested assets of the combined Trust Funds was $85 billion in 2003. The combined Trust Fund assets earned interest at an effective annual rate of 6.0 percent.

The Board of Trustees is comprised of six members. Four serve by virtue of their positions with the federal government: John W. Snow, Secretary of the Treasury and Managing Trustee; Jo Anne Barnhart, Commissioner of Social Security; Tommy G. Thompson, Secretary of Health and Human Services; and Elaine L. Chao, Secretary of Labor. The other two members, appointed by the President and confirmed by the Senate, are John L. Palmer and Thomas R. Saving.

The 2004 Trustees Report is posted at http://www.socialsecurity.gov/OACT/TR/TR04/.