Social Security Trust FundOn Tuesday, The Congressional Budget Office updated its annual projections on the health of Social Security and its Trust Funds. In essence, if you're still working and you're depending on that program to cover your retirement -- you'll be in for a shock. Or three.

Shocker No. 1: It's failing faster than even last year's dire projection.

The table below shows the CBO's projections for combined Social Security Old Age, Survivors, and Disability Insurance Trust Fund balances, with the 2012 column showing its projections as of Jan. 2012 and the 2013 column reflecting the current update:

Year 2012 Projection 2013 Projection Difference
2012 $2,709 $2,719 $10
2013 $2,743 $2,748 $5
2014 $2,762 $2,762 $0
2015 $2,775 $2,766 ($9)
2016 $2,791 $2,767 ($24)
2017 $2,807 $2,764 ($43)
2018 $2,818 $2,758 ($60)
2019 $2,817 $2,741 ($76)
2020 $2,802 $2,706 ($96)
2021 $2,768 $2,652 ($116)
2022 $2,713 $2,573 ($140)
2023 N/A $2,468 N/A
Data from the Congressional Budget Office. Dollar amounts in billions.

Based on that newer projection, the combined Trust Fund is expected to:
  • Peak two years earlier -- in 2016 rather than last year's 2018 projection.
  • Have $140 billion less in 2022 than projected for that same period just last year.
  • Drain an additional $105 billion in 2023 alone -- just one decade from now.
The bad news from last year's CBO projection foretold the three-year shift forward in the projected collapse date of the combined Trust Fund in the 2012 Social Security Trustee's Report. This year's downgrade suggests that last year's 2033 collapse date will likely once again be revised closer -- to 2032 or perhaps even sooner.

That 2032 D-Day is less than two decades away, putting it well in the expected lifespan of typical current workers -- and even of some current retirees.

Shocker No. 2: Social Security spending will nearly double over the next decade.

Not only is the trust fund running out faster than anticipated, but spending is on track to skyrocket -- nearly doubling over the next decade to $1.4 trillion from last year's $0.8 trillion.

The table below shows the gory details:

Year OASI Projection DI Projection Combined Projection
2012 $627.2 $135.1 $762.3
2013 $664.0 $141.3 $805.3
2014 $700.9 $147.6 $848.5
2015 $741.7 $154.4 $896.1
2016 $787.0 $160.5 $947.5
2017 $835.9 $166.1 $1,002.0
2018 $888.7 $172.0 $1,060.7
2019 $945.7 $178.5 $1,124.2
2020 $1,007.1 $185.4 $1,192.5
2021 $1,069.2 $194.6 $1,263.8
2022 $1,134.3 $203.8 $1,338.1
2023 $1,203.1 $213.3 $1,416.4
Data from the Congressional Budget Office. Dollar amounts in billions.

Combine the rapidly shrinking trust fund with the escalating expected expenses, and the ugly future becomes abundantly clear. Either taxes are going to skyrocket to cover the costs, or benefits will need to be cut. Neither option looks all that good to anyone who expects to be working more than a decade or so from now.

Shocker No. 3: Disability claims are high -- and rising.

The charts below shows the percentage of working age people by age bracket that are on disability:



Charts from the Congressional Budget Office.

Not only has the percentage of working-age people on disability across nearly all age groups risen fairly steeply over the past two decades, but the CBO is also projecting the levels to continue rising.

People on Social Security Disability generally aren't working -- and if they are working, they usually aren't earning much in the way of reliable income . As a result, the CBO's projection suggests fewer people will be paying into the system, while more receive benefits from it.

That's not a sustainable situation. It's especially not sustainable when combined with the rapidly shrinking Social Security Trust Funds and the country's quickly aging population.

The Bottom Line

The three shockers from the CBO paint a dire picture, indeed: Social Security's combined Trust Fund is collapsing quicker than anticipated, Social Security costs will nearly over the next decade, and Social Security disability claims are high and still rising.

Take it all together, and it's a stern warning of a pending financial catastrophe for a program that over 50 million Americans currently rely on -- and nearly everyone working in the country expects to receive.

More from the Retirement Center:



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363 Comments

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Watcher

The way Congress bought votes letting anyone receive lifetime disability coverage simply by claiming they have pain or problems that cannot be detected/measured medically has/will cost Social Security billions in payments to these people. Congress could easily solve this by going back to the previous requirements for medical proof of disability. How often have we all read how lifetime disability payments has become the new unemployment insurance.

February 12 2013 at 12:12 PM Report abuse +1 rate up rate down Reply
dlwoodford

Well they have to pay fpr Obama care.

February 12 2013 at 2:46 AM Report abuse -2 rate up rate down Reply
socalflash

Bottom line. Accoring to these latest CBO projections we are good for the next 20 years. After that we will have to increase taxes, reduce benefits, or increase retirement age to make up the shortfall. I expect we will, in the near future, raise taxes a little or eliminate the ceiling - so that wealthy folks pay ss tax on all their income....or both. Problem solved.

February 12 2013 at 1:22 AM Report abuse rate up rate down Reply
daddeduc

There is a simple solution which every one, except our elected officials can agree on. Pay our elected officials on a per hour worked or piece work basis, have them pay for their own health care as other government employees, have them pay for their retirement as other government employees. set up a pay scale for the congress. If any break the laws, they should be treated as any government employee whos fails to obey the ethics rules.

February 11 2013 at 11:56 PM Report abuse +2 rate up rate down Reply
stick4013

I joined the Submarine Navy when I was 18. I served nearly 5 years. Our missions were mostly clasified to this day - Betweern Cuba and Key West and in the North Sea. Did some risky stuff on a Diesel Sub. I volunteered for everything. Then when I was honerably discharged and de-briefed I went to work. I paid into SS without any questions. I have patents, I worked on just about all of the high tech aerospace weapons systems. I worked like a dog and I paid in big time. I have done thousands of hours of commuity service for free and I just took the goverments word that they would handle my SS.... They are covenant breakers. If I could have taken that money and invested it I would be rich. Now they say that it is in danger? WTF !!! Is anyone driving this car? I live simply in a doublewide in the country. I have a truck and a Harley. They live like kings and queens and when they go somewhere they use 4 or 5 $400,000.00 special built Cadalacs and are surrounded by no telling how many SS agents. I could live the rest of my life on what they spend in a week. To say the least I am very dissapointed in them. They flaunt their richness in our faces. I

February 11 2013 at 10:49 PM Report abuse +10 rate up rate down Reply
jtippen

If these charts are true, Romney was telling the truth. When you add them, over 40% of working age people are getting something for nothing. It's time to re-evaluate what determines eligibilty. I personally know 3 people getting disability. Two are under 25, one is almost 50. Of those, two are on full disability, one is 20%, all of them have all their body parts and can walk and run. They also have jobs.

February 11 2013 at 9:53 PM Report abuse -5 rate up rate down Reply
audioknot1

Lift the cap on the wealthy now, and apply it to ALL investment income! Make the wealthy pay.

February 11 2013 at 9:06 PM Report abuse +6 rate up rate down Reply
2 replies to audioknot1's comment
twosharks

They pay for most everything now. When do the likes of you get a to pitch in for the good of all?

February 11 2013 at 10:01 PM Report abuse -6 rate up rate down Reply
Bob Mull

not a very smart comment. goes to show how very little you know

February 12 2013 at 12:38 AM Report abuse +1 rate up rate down Reply
goatcars

Shocker???? Have you listened to Paul Krugman lately??? He feels are debt is NOT a problem and "kicking the can down the road" is the RESPONSIBLE thing to do !!!! With that kind of misguided "logic", what else would you expect from the CBO report?????

February 11 2013 at 8:56 PM Report abuse -6 rate up rate down Reply
sgentilejr

Why should this be a surprise to anyone. Obama reduced the SS deduction taken out of workers paychecks in half last year to help put more money into people's pockets to help the economy. Thus Obama took from SS to help the people so not SS has less money. Gee you do not have to be a rocket scientist to know that lowering the SS deduction would lower the amount of money in the SS fund.

February 11 2013 at 8:21 PM Report abuse +2 rate up rate down Reply
1 reply to sgentilejr's comment
Neill

2% is now half of 6.2% . That is also not being done as of Jan 1. Back to arithmatic 1 for you.

February 11 2013 at 11:23 PM Report abuse +2 rate up rate down Reply
autumnwriter

It is clear that SS benefits have to be reduced and the best way is to increase the retirement age. We have known this for years and the longer we delay the higher the age will have to be when the solution is, at last, implemented.

February 11 2013 at 6:43 PM Report abuse -5 rate up rate down Reply