The Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance trust funds just released their 2024 annual report. In layman’s terms these are the two sources of reserves that support Social Security (SS) and SS disability insurance (SDI). You may already have heard the bad news in the media about how the SS fund is expected to become depleted by 2033. That’s one year earlier than what had been reported last year.

Should we be worried? Not yet.

There are two primary sources of funding for SS benefits: (1) the SS trust fund and (2) payroll taxes collected from current workers and their employers. Even if Congress were to do nothing to fix the system before 2033, retirees would still be able to receive 83% of their promised benefits after that date from payroll taxes alone according to the report. And by 2098 the program would still be able to cover 73% of benefits. It’s not as if SS were to go bankrupt at any foreseeable future time.

Not only that, there are numerous changes the trustees have identified that would go a long way towards shoring up the program’s finances. They include:

• Reducing the annual cost-of-living adjustment
• Reducing the level of monthly benefits
• Increasing the retirement age
• Reducing family benefits
• Increasing payroll taxes
• Inclusion of other sources of revenue
• Investment in publicly-traded securities
• Increasing taxation of benefits

Some of these changes are already underway. In order to save costs the retirement age has already been pushed out to age 66 and will reach age 67 in a few years. Other options have already been bounced around Washington, such as increasing payroll taxes by eliminating the cap on qualifying earnings and/or taxing more than 85% of wealthy seniors’ SS income. Even cost-of-living adjustments – which have already been reduced for income tax bracket calculations as part of the 2017 federal tax overhaul – are on the table. In short there are plenty of potential fixes as long as the political will is there to implement them.

What about the impact of those floods of immigrants we’ve been hearing about recently? Actually they help improve the system. Undocumented immigrants cannot claim benefits yet pay payroll taxes. According to AARP the net contribution from undocumented workers and their employers in 2010 alone amounted to $12 billion.

There should also be no fear about politicians raiding the SS trust fund to pay for other projects. It has never been part of the general fund and therefore cannot be used for any purpose except for paying SS benefits. While the government has occasionally borrowed money from the fund, it is obligated to pay back everything including interest.

In short, while work is needed to keep the SS trust fund solvent, there are lots of ways to achieve it without unduly burdening current recipients. The federal government could even choose to run a deficit to bridge the gap. So it’s probably not worth worrying about the disappearance of Social Security. There are lots of other more important things to worry about these days.

Here’s a link to the report: https://www.ssa.gov/OACT/TR/2024/