SOCIAL SECURITY

News Release

Statement of William A. Halter,
Acting Commissioner of Social Security,
on the 2001 Annual Report
of the Social Security Board of Trustees

The financial condition of the Social Security trust funds has modestly improved. This year's Trustees Report estimates that Social Security will remain solvent until 2038, or one year later than forecast in our last report. The trustees also estimate that tax revenues will exceed expenditures until 2016, again a year later than estimated in our last report. The additional year of solvency in this year's report largely results from small adjustments in demographic and disability projections.

Importantly, as indicated in the chart, the program is currently running large surpluses. At the end of 2000, the trust funds totaled over $1 trillion in assets. In this year, $165 billion will be added to the trust funds and under mid-range assumptions, the trust funds will total $3.4 trillion by 2010. The accumulation of these surpluses allows our country to pay down the privately held national debt and increase national savings, and thereby better positions us to finance the retirement of the Baby Boom generation. Maintenance of fiscal policy discipline is critical to ensuring the long-run stability of Social Security.

This is the 61st report issued to Congress by the Social Security Board of Trustees, who are responsible for providing an objective, non-partisan assessment to the American people of Social Security's financial status. Millions of American workers and program beneficiaries rely on Social Security to provide a foundation for their retirement or income security when a family breadwinner dies or becomes disabled.

Social Security is the most successful, most popular domestic government program. Today, 154 million workers are covered under Social Security, and each month the program pays benefits to 45 million beneficiaries.

In just the past four decades, Social Security has helped reduce the poverty rate of older Americans from 35 percent to less than 10 percent today. Social Security is the major source of income for 2/3 of older Americans, and virtually the only source of income for 1/3 of older Americans. In a very real sense Social Security is the most important income security program in American history.

Social Security is more than a retirement program. It also provides disability and survivors insurance protection for millions of workers and their families. In fact, about one of every three Social Security beneficiaries is not a retiree.

Today's good news about trust fund solvency should not obscure the fact that serious demographic challenges lie ahead. Projections show that the trust funds are adequately financed until 2038 but face increasing costs as the Baby Boom generation retires. Without changes, the trust funds will be able to pay only about 73 percent of benefits when the reserves are depleted in 2038.

We therefore need to strengthen the program and ensure retirement security, not only for current beneficiaries and for the 79 million baby boomers approaching retirement, but also for our children and grandchildren. The deficits projected for the trust funds need to addressed in a timely way. Gradually phasing in any necessary changes will give workers time to adjust their financial plans.

Just as we should not underestimate the demographic challenges, we should not overestimate the types and sizes of changes necessary to strengthen Social Security for generations to come. Social Security surpluses for the next 15 years provide the time and opportunity to strengthen this program. With informed public discussion, fiscal policy discipline and timely legislative action, Social Security will continue to play a critical role in the lives of virtually every American.

See the Social Security News Release.

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