Latest news with #OASDI
Yahoo
3 days ago
- Business
- Yahoo
Trump's megabill could deplete Social Security's trust funds faster: Analysis
President Trump's tax and spending megabill could speed up insolvency for Social Security's trust funds, according to an analysis from the Trump administration's chief actuary for the program. The Office of the Chief Actuary (OACT) at the Social Security Administration (SSA) released an analysis this week of the law's potential effects on the program's finances in response to a request from Sen. Ron Wyden (Ore.), the top Democrat on the Senate Finance Committee. The report estimated that implementation of Trump's One Big Beautiful Bill Act would 'result in net increased program cost' beginning this year, while noting the spate of recent tax changes in the major package. 'Because the revenue from income taxation of Social Security benefits is directed to the Social Security and Medicare trust funds, implementation of the OBBBA will have material effects on the financial status of the Social Security trust funds,' the report stated. With the recent tax changes, the office projected depletion of the combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds will accelerate from 'the third quarter of 2034' under the recent board of trustees' report baseline to 'the first quarter of 2034 following implementation of the law.' A closer look at just the OASI Trust Fund found its reserve depletion date could accelerate 'from the first quarter of 2033 to the fourth quarter of 2032,' while the DI Trust Fund reserves 'are not projected to become depleted during the 75-year projection period' when both funds are considered separately. However, both accounts have usually been considered as a combined fund when discussing the program's solvency, as lawmakers have allowed for interfund borrowing between accounts to temporarily extend solvency in the past. The analysis projected that the total net increase in OASDI program cost through 2034 would amount to $168.6 billion, as it estimates the trust funds will begin to see lower levels of tax revenue of Social Security benefits starting this year. The Hill has reached out to the White House for comment. The actuary also projected implementation of the law would 'decrease (worsen) the 75-year OASDI actuarial balance by 0.16 percent of taxable payroll.' The office notes the analysis is limited to the effects of the income tax changes and how they'll affect 'taxation of benefits revenue to the trust funds.' It added that it will use the results of the analysis as an updated baseline when evaluating 'effects of proposals that affect the OASI and DI Trust Funds, and particularly proposals intended to extend solvency, starting now and until the issuance of the 2026 Trustees Report next year.' 'The 2026 Trustees Report will incorporate the latest data, assumptions, and methods available at the time of its development, in addition to possible refinements in our understanding of the effects of the OBBBA,' the analysis states. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Solve the daily Crossword
The Hill
4 days ago
- Business
- The Hill
Trump's megabill could deplete Social Security's trust funds faster: analysis
President Trump's 'big, beautiful' tax and spending package could speed up insolvency for Social Security's trust funds, according to a new analysis from the Trump administration's chief actuary, which oversees the program. The Office of the Chief Actuary (OACT) at the Social Security Administration (SSA) released an analysis this week of the law's potential effects on the program's finances in response to a request from Sen. Ron Wyden (Ore.), top Democrat on the Senate Finance Committee. The report estimated that implementation of Trump's One Big Beautiful Bill Act would 'result in net increased program cost' beginning this year, while noting the spate of recent tax changes in the major package. 'Because the revenue from income taxation of Social Security benefits is directed to the Social Security and Medicare trust funds, implementation of the OBBBA will have material effects on the financial status of the Social Security trust funds,' the report stated. With the recent tax changes, the office projected depletion of the combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds will accelerate from 'the third quarter of 2034' under the recent board of trustees' report baseline to 'the first quarter of 2034 following implementation of the law.' A closer look at just the OASI Trust Fund found its reserve depletion date could accelerate 'from the first quarter of 2033 to the fourth quarter of 2032,' while the DI Trust Fund reserves 'are not projected to become depleted during the 75-year projection period' when both funds are considered separately. However, both accounts have usually been considered as a combined fund when discussing the program's solvency, as lawmakers have allowed for interfund borrowing between accounts to temporarily extend solvency in the past. The analysis projected that the total net increase in OASDI program cost through 2034 would amount to $168.6 billion, as it estimates the trust funds will begin to see lower levels of tax revenue of Social Security benefits starting this year. The Hill has reached out to the White House for comment. The actuary also projected that implementation of the law would 'decrease (worsen) the 75-year OASDI actuarial balance by 0.16 percent of taxable payroll.' The office notes the analysis is limited to the effects of the income tax changes and how they'll affect 'taxation of benefits revenue to the trust funds.' They added that it will use the results of the analysis as an updated baseline when evaluating 'effects of proposals that affect the OASI and DI Trust Funds, and particularly proposals intended to extend solvency, starting now and until the issuance of the 2026 Trustees Report next year.' 'The 2026 Trustees Report will incorporate the latest data, assumptions, and methods available at the time of its development, in addition to possible refinements in our understanding of the effects of the OBBBA,' the analysis states.
Forbes
30-07-2025
- Business
- Forbes
Social Security: Bankrupt, Insolvent Or Neither?
Over the years much has been written and communicated in the media that Social Security is going bankrupt or is insolvent and this is creating a lot of uneasiness among Seniors. At the outset, we need to understand that Social Security is not part of the government's general fund, Social Security is self-funded. So, when you hear all of the talk about debt and deficits, that refers to the general fund and has nothing to do with the Social Security trust fund. Let's define bankruptcy and insolvency. Bankruptcy is defined as a formal and legal declaration of the inability to settle debts. Insolvency is that state where an organization cannot pay debts on time because of lack of funds or bank balances. Based on the above, insolvency is a timing issue where bankruptcy is a finality. Below is a summary taken from the 2025 OASDI Trustees Report with projected operations of the Social Security trust fund through 2034. Think of the trust fund as a 'savings account' created by Social Security. The income going into the trust fund is made up of payroll taxes contributed by employees and matched by their employer. Payroll taxes represent 91% of the trust funds income. Income taxes on Social Security represent 6% of the income and interest earned by the trust fund represents 3% of the total income. As you can see from the chart, 2033 is when things change. In recent years, more benefits are being paid out than income coming in. The difference is made up by using the 'savings account.' In 2033 we will have used up all of the 'savings account'. The projected income in 2033 of $1,712 represents 78.2% of the projected benefits to be paid. How do we solve this problem? There are a number of options on the income side and the expense side to shore up the trust fund issued by the Office of the Chief Actuary at the Social Security Administration on September 25, 2024. This report is based on the 2024 Trustees Report. The report focuses on: Two of the bigger provisions that will help solve the problem and shore up the financial stability of the trust fund revolve around increasing the payroll tax rate from 12.4% to 16.0% or making all W-2 wages and self-employment income subject to the Social Security payroll tax which is now limited to $176,100. The report contains approximately 140 proposed provisions that would eliminate the shortfalls and let Social Security pay benefits based on the current formula being used. If none of these proposed provisions are enacted by Congress, then benefits are projected to be cut across the board anywhere ranging from 20% to 25%. As long as people continue to work, money will be going into the trust fund, and benefits will be coming out of the trust fund. The question is, how much? To sum up, Social Security is not going to go bankrupt unless everybody quits working. In 2033 Social Security will technically become insolvent because it will not be able to pay benefits at the rate they are paying now under the current method of calculating monthly benefits. If Congress does not make the necessary changes to pay benefits using the current formula, the insolvency will be cured by paying current benefits in the amount of income coming into the trust fund. Money in, money out! So, I would say Social Security is neither. It can't go bankrupt, and when it technically goes insolvent, it cures that by adjusting the payout to equal the income. Remember, take the wrong benefit at the wrong time, it's usually smaller and forever.
Newsweek
19-06-2025
- Business
- Newsweek
Social Security Is Running Out of Money: What To Know
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The trust funds that help pay Social Security benefits to millions of Americans are due to run out of money in less than a decade. In an annual report released on Wednesday, trustees of the Social Security Administration (SSA) have said retirement benefit funds could be depleted by 2034, unchanged from last year's prediction, while disability funds will remain solvent until 2099. Social Security forms the backbone of retirement security for tens of millions of Americans, with the Social Security Administration (SSA) distributing monthly checks to some 70 million people. Here is everything you need to know about the report, and what it means for the future of your benefits. What Are the Trust Funds? There are two main sources that help pay benefits. These are the Old-Age and Survivors Insurance (OASI) Trust Fund, which pays for retirement, spousal and survivor benefits, and the Disability Insurance (DI) Trust Fund, which endows programs like Supplemental Security Income (SSI) for disabled Americans. The majority of benefit payments are funded by payroll taxes, income tax on Social Security benefits, and interest on trust-fund reserves; this is set at a rate of 6.2 percent for employees and companies, and 12.4 percent for self employed workers, up to the current threshold of $176,100 in earnings per year. These funds are distinct and legally separate, but are often combined as "OASDI," to reflect the financial health of Social Security. When put together, the total funds that pay benefits are now expected to be depleted in 2034—a year earlier than previously expected. Stock image/file photo: A Social Security card rests with U.S. dollars. Stock image/file photo: A Social Security card rests with U.S. dollars. GETTY What Happens When the Trust Funds Run Out? The report outlines that, if nothing is done to shore up the funds, from 2033 onward, retirement, spousal, and survivor benefits will be payable only at 77 percent of current rates. When combined, benefits would be reduced to 81 percent of current rates starting in 2034—a year earlier than previously thought. Why Are Trust Funds Running Out? The long-term outlook for the combined Social Security trust fund worsened this year due to three main factors, according to the trustees report. First, the repeal of the Windfall Elimination Provision and Government Pension Offset, implemented by the passing of the Social Security Fairness Act in January, increased benefits for some workers, accelerating the fund's depletion. Second, the expected recovery in fertility rates was delayed by 10 years, now assumed to reach normal levels by 2050. In recent years, Social Security has faced paying out more benefits to older Americans while the pool of workers paying taxes is depleting, and fertility rates have also dropped, contributing to the problem. Wednesday's report still projects that the U.S. fertility rate will eventually rise to 1.9 children per woman, up from the current rate of 1.6. However, trustees now expect this shift to happen by 2050—10 years later than previously predicted. Third, projections for the share of gross domestic product (GDP) going to worker wages were lowered, reducing expected payroll tax revenue, according to the report. How Can It Be Fixed? Improving the funding outlook for Social Security benefits requires action from lawmakers. This is not an unfamiliar situation—the trust funds faced insolvency back in the early 1980s. Following an act of Congress, a range of changes were made to how Social Security is funded, including accelerating payroll tax increases, gradually raising the retirement age, and making a portion of Social Security benefits taxable. More changes are being considered as the threat of insolvency looms again. Rhode Island Senator Sheldon Whitehouse and Representative Brendan Boyle of Pennsylvania, both Democrats, recently reintroduced the Medicare & Social Security Fair Share Act, which would impose payroll taxes on wages and investment income above $400,000. Vermont Senator Bernie Sanders has made similar proposals, albeit implementing payroll taxes on income above $250,000. He has also advocated for officially combining OASI and DI funds. Republicans, on the other hand, have supported the raising of the retirement age. In March 2024, prior to the presidential election, the Republican Study Committee, comprising 170 GOP lawmakers, published a budget proposal that would include "modest adjustments to the retirement age for future retirees to account for increases in life expectancy" to tackle the solvency issue. Social Security advocacy groups have called for lawmakers to prioritize taking action. "It is time to enact common-sense legislation to bring more revenue into Social Security," Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, said in a statement emailed to Newsweek. "Current and future seniors (nearly 50 percent of whom rely on their benefits for all or most of their income)—should not be asked to bear the cost of improving the program's finances." "This report shows that Social Security is fully affordable, costing only about 6 percent of GDP at the end of the 21st century," Nancy Altman, president of Social Security Works, said. "It has a modest funding shortfall, which is still years away. There is no question Congress will act to avert the shortfall, as it always has in the past. The question is what Congress will do."
Time of India
29-05-2025
- Business
- Time of India
A list of US states where seniors are most vulnerable to social security cuts
Which states are vulnerable to social security cuts? Live Events Which is the most vulnerable state? Top 10 States Where Seniors Rely Most on Social Security (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Recent attacks on the Social Security Administration (SSA) by tech billionaire Elon Musk's DOGE team and certain members of the Trump administration are threatening the stability of this vital agency. These actions put at risk the financial security of millions of retired, disabled, and low-income Americans, while also disrupting the state and local economies that rely heavily on this Security's 'Old-Age, Survivors, and Disability Insurance' (OASDI) benefits represent about 5% of the nation's GDP, but they make up nearly 10% of the income that U.S. consumers can actually spend—unlike non-cash benefits or income allocated to businesses, governments, and nonprofits, which are also factored into in states such as Vermont, Oregon, and New Hampshire are among the most vulnerable to potential cuts in Social Security benefits, according to a new report from Retirement Living, reports Newsweek. The analysis highlights the states where retirees are most dependent on Social Security for basic living expenses in the report comes at a time of major restructuring within the Social Security Administration (SSA), driven by policy shifts under the Trump administration. Earlier this year, the SSA announced plans to eliminate 7,000 positions as part of a broader effort by the Department of Government Efficiency (DOGE) to reduce federal argue that these cuts could delay or disrupt access to benefits for millions of vulnerable Americans. The closure of field offices and internal departments is already making it harder for seniors and people with disabilities to get the support they need. For over 40 percent of Americans aged 65 and older, Social Security is their only source of retirement income—making the stability of those benefits crucial for states pose especially high risks to retirees, not only due to their heavy reliance on Social Security but also because of elevated living costs and limited local support services.A spokesperson for RetirementLiving told Newsweek: "Our research shows that many retirees rely on Social Security as their financial lifeline, not just a supplement. That's why older adults in some states are more at risk than others. In places with higher economic vulnerability, a large portion of the senior population simply can't afford to lose any part of their benefit."Vermont ranks as the most vulnerable state, according to the report. It has the eighth-highest cost of living in the US, a senior poverty rate of 9.6 percent, and a high incidence of Social Security ranks third on the list. Retirees there struggle to stretch an average monthly benefit of $1,979.84 in a state with the second-highest cost of living and the 20th-highest senior poverty rankings are based on multiple factors, including the percentage of seniors who depend on Social Security, the cost of living, senior poverty rates , and the prevalence of fraud related to 90.9 percent of seniors receive Social Security; the average check is $1,949.07; the cost-of-living index is Hampshire: 91.6 percent of seniors; $2,087.54 average check; cost-of-living 82.8 percent of seniors; $1,979.84 average check; cost-of-living 90 percent of seniors; $2,003.81 average check; cost-of-living York: 83.1 percent of seniors; $1,922.40 average check; cost-of-living 90.1 percent of seniors; $2,085.16 average check; cost-of-living Jersey: 85 percent of seniors; $2,087.95 average check; cost-of-living Island: 88.4 percent of seniors; $1,963.73 average check; cost-of-living 92.7 percent of seniors; $1,909.85 average check; cost-of-living 83.9 percent of seniors; $1,895.23 average check; cost-of-living Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, warned last month that the DOGE-led cuts to the SSA have already made it harder for seniors, people with disabilities, and their families to access the benefits they've earned.A recent survey echoes those concerns, revealing that 59 percent of working-age Americans fear Social Security may not be available by the time they prospect of further cuts at the SSA remains unclear, and several advocacy groups have launched legal actions seeking to reverse DOGE-ordered changes."When Social Security spending disappears from these communities, it's not just individual families that suffer," Ryan said. "Think of the 'trickle down.' Grocery stores, pharmacies, the small businesses that survive on that steady monthly flow of federal dollars."
