SOCIAL SECURITY

News Release
 

Little Change in Social Security Solvency

Trustees Recommend Timely Action

The 2005 Social Security Trustees Report shows little change in the projected financial status of the Social Security program over last year. The Trustees Report projects that the Social Security Trust Fund will be exhausted in 2041 - one year sooner than last year’s projection. The Trustees recommend that projected trust fund deficits be addressed in a timely way to allow for gradual changes and advance notice to workers.

In the 2005 Annual Report to Congress, the Trustees announced:

• The projected point at which tax revenues will fall below program costs comes in 2017 – one year earlier than the projection in last year’s report.

• The projected point at which the Trust Funds will be exhausted comes in 2041 – also one year earlier than the projection in last year’s report.

• The projected actuarial deficit over the 75-year long-range period is 1.92 percent of taxable payroll, slightly higher than the estimate in last year’s report and the same as in the 2003 Trustees Report.

• Over the 75-year period, the Trust Funds require additional revenue equivalent to $4.0 trillion in today’s dollars to pay all scheduled benefits. This unfunded obligation is $300 billion higher than the amount estimated last year.

“For nearly 70 years, Social Security has provided financial security to American workers and their families,” said Jo Anne Barnhart, Commissioner of Social Security.  “Our grandparents and parents were confident that Social Security would be there for them.  Current retirees and near retirees can be just as confident.  But for our children and grandchildren, unless changes are made, this report shows that their promised benefits are not secure.  I am confident that by coming together in a bipartisan way we can ensure that Social Security continues to provide financial security for future generations.”

Other highlights of the Trustees Report include:

• Income to the combined Old-Age and Survivors, and Disability Insurance (OASDI) Trust Funds amounted to $658 billion in 2004.

• During the year, an estimated 157 million people had earnings covered by Social Security and paid payroll taxes.

• The Trust Funds paid benefits of more than $493 billion in calendar year 2004. There were 48 million beneficiaries at the end of the calendar year.

• The cost of $4.5 billion to administer the program in 2004 was a very low 0.9 percent of total expenditures.

• Total expenditures from the combined OASDI Trust Funds amounted to $502 billion in 2004.

• The assets of the combined OASDI Trust Funds increased by $156 billion in 2004 to a total of $1.7 trillion.

• Interest earned on the invested assets of the combined Trust Funds was $89 billion in 2004. The combined Trust Fund assets earned interest at an effective annual rate of 5.7 percent.

• The changes in key dates for the combined Trust Funds are due to updated economic data from last year's report.

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; Michael O. Leavitt, 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 2005 Trustees Report is posted at www.socialsecurity.gov/OACT/TR/TR05/index.html

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