Can We Prevent a National Retirement Disaster?

William Thomas Cain/Getty Images

William Thomas Cain/Getty Images

In July 2014, the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds delivered its 2014 annual report to Congress. The report was intended to inform Congress about the current state of the Old-Age, Survivors, and Disability Insurance (“OASDI”) and the Disability Insurance (“DI”) programs, and projects forward to the best of its abilities the health of the programs in the future. These programs fall under the umbrella of Social Security.

The 2014 report continued in the same tone as the updates from 2013 and 2012 and vindicated the position of many policymakers and a majority of the American population. Chiefly: there is a problem facing Social Security. To be dramatic about it, although the language of the report is modest, a crisis is brewing.

At the end of 2013, the OASDI program was providing benefit payments to approximately 58 million people. This group consisted of 41 million retired workers, 6 million survivors of retired workers, 11 million disabled workers, and all of their dependents. Total expenditures for the year were $823 billion, a 4.7% increase from reported expenditures of $786 billion in 2013.

On the other side of the equation, total income — i.e. taxes collected that are appropriated for the OASDI program — was $855 billion, an increase of 1.8% from the $840 billion collected in 2013. That consisted of $752 billion in non-interest income, and $103 billion in interest earnings. In 2012, the program deficit was $169 billion, largely due to a temporary reduction in the Social Security payroll tax in 2011 and 2012 (the program ran a pre-interest deficit in 2011 as well). In 2014, with some more revenue coming in, the program was expected to run a pre-interest deficit of $80 billion, following a deficit of $79 billion in 2013.