The Social Security Trustees have just released their 2014 report, which updates their actuarial estimates of when the program’s Disability Insurance (DI) trust fund and the Old Age and Survivor’s Insurance (OASI) trust fund will run out of money, forcing both disability and pension benefits to be cut.
Let’s get to the worst news first. Social Security’s Disability Insurance trust fund will be the first to be depleted, which the trustees now forecast will occur in less than two years. Under current law, when the DI trust fund is depleted in 2016, Supplemental Security Income (SSI) payments made to Americans with disabilities will be permanently cut by nearly one-fifth.
That change will negatively impact over 8.4 million Americans, who can expect to see their monthly income payments slashed by 19% according to the Trustee’s latest estimate, just seven years after the DI trust fund last ran a surplus from the portion of Social Security’s payroll taxes dedicated to it.
Meanwhile, things are not as immediately dire for Social Security’s OASI trust fund, which is expected to last another nineteen years before it is fully depleted after years of paying out more in benefits than it collects through Social Security’s payroll taxes. When that happens, the monthly income benefits paid to retired Americans, or to the surviving spouses of working Americans who paid Social Security’s payroll taxes, will be slashed by nearly one-fourth.
For more information, Charles Blahous, one of Social Security’s Public Trustees, provides a good overview of what’s in the 2014 Trustees’ report at e21.