Social Security’s Financial Outlook: The 2016 Update in Perspective

IB#16-10

The brief’s key findings are:

  • The 2016 Trustees Report shows virtually no change:
    • Social Security’s 75-year deficit is 2.66 percent of payroll, just a hair below the 2015 projection.
    • The deficit as a percentage of GDP remains at about 1 percent.
    • Trust fund exhaustion is still 2034, after which payroll taxes still cover about three quarters of promised benefits.
  • The shortfall is manageable, but action should be taken soon to restore confidence in the program and give people time to adjust to needed changes.
  • Also of note, the Bipartisan Budget Act of 2015 did two things:
    • It reallocated payroll taxes to extend the life of the DI trust fund.
    • It helpfully eliminated claiming loopholes, which had a small positive effect on program finances.