To correct some recent stories suggesting that Social Security faces deep and immediate financial problems, a new report from our colleague Kathy Ruffing outlines the program’s outlook over the short and long term. Here’s the summary:
In recent months, a few commentators have sounded an alarm about the recession’s impact on Social Security’s near-term prospects, which may lead some people to think that the program faces financial problems in the next several years. Fortunately, that is not the case. Social Security continues to run annual surpluses and remains capable of paying scheduled benefits in full for nearly three decades.
The deep recession has indisputably affected the Social Security system’s finances, as is visible in the latest projections by the Social Security trustees and by the independent Congressional Budget Office. But both organizations estimate that, under current trends, the program can continue to pay full benefits from the trust funds until 2037. Thus, Social Security faces no immediate threat.
Nevertheless, Congress and the Administration should act sooner rather than later to restore Social Security’s long-run solvency. Prompt action would allow changes to be phased in gradually and afford people ample time to adjust their financial plans.