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June 14, 2022
Social Security: Selected Findings of the 2022 Annual Report
According to the recent report of the Board of Trustees of
dates under the trustees’ intermediate assumptions, which
the Social Security Trust Funds, the program’s finances are
reflect their best estimate of future experience.
in a similar, albeit marginally better, position in 2022
relative to what they were in 2021. This relative
Table 1. Key Dates Projected for the Social Security
improvement is largely attributed to a stronger-than-
Trust Funds in the 2021 and 2022 Trustees Reports
expected recovery from the recession experienced in 2020.
(Under the Trustees’ Intermediate Assumptions)
Under intermediate assumptions, the projected combined
2021 Report
2022 Report
trust fund asset depletion date is 2035 (versus 2034 in last
year’s report)
OASI DI
OASDI OASI
DI
OASDI
, after which the percentage of benefits
Cost exceeds
payable would be 80% (versus 78% in 2021).
noninterest 2010 2040
2010
2010 2044
2010
Social Security Overview
revenues
Cost exceeds
Social Security is a self-financing program that in 2022
total
2021 2045
2021
2021 2090
2021
covers approximately 178 million workers and provides
revenues
monthly cash benefits to over 65 million beneficiaries. It is
Trust fund
the federal government’s largest program in terms of both
reserves
2033 2057
2034
2034 >2096 2035
the number of people affected (i.e., covered workers and
depleted
beneficiaries) and its finances. Social Security is composed
Source: CRS, based on the 2021 and 2022 OASDI trustees report.
of Old-Age and Survivors Insurance (OASI) and Disability
Insurance (DI), referred to collectively as OASDI.
In the 2022 report, the trustees project a date of 2034 for
OASI trust fund reserve depletion. The DI trust fund is not
The OASDI program is primarily financed (90.1% of total
projected to become depleted in the 75-year projection
revenues in 2021) through a payroll tax applied to Social
period. As stated, “The DI program continues to have low
Security–covered earnings up to an annual limit. Some
levels of disability applications and benefit awards for
beneficiaries pay income tax on a portion of their Social
2021. Disability applications have declined substantially
Security benefits (3.5% of total revenue in 2021). From
since 2010, and the total number of disabled-worker
1983 to 2009, the OASDI program collected more in tax
beneficiaries in current payment status has been falling
revenues than needed to pay benefits. Excess revenues are
since 2014.” The 2020 report marks the first instance since
held in interest-bearing U.S. Treasury securities, providing
the 1983 report that the DI trust fund is not projected to
a third source of funding for the program (6.4% of total
become depleted inside the 75-year projection period.
revenues in 2021). Monthly benefits are the largest OASDI
program cost (99.0% of total costs in 2021). Administrative
In the previous year’s (2021) report, as shown in Table 2,
and other costs accounted for the remainder.
the trustees projected that the trust funds’ overall balance
The Trust Funds
(i.e., the total amount of accumulated asset reserves) would
decrease. Asset reserves held in the trust funds decreased
Both the OASI and DI programs use a trust fund financing
less than expected during 2021 owing to larger-than-
mechanism. Monies credited to these trust funds are
projected revenues and lower-than-projected costs.
earmarked for paying Social Security benefits and certain
administrative costs. Using a trust fund allows OASI and DI
Table 2. Financial Operations for the Social Security
programs to track their respective programs’ revenues and
Trust Funds in the 2021 and 2022 Trustees Reports
costs and to hold any accumulated assets from years when
(In Billions; Under the Trustees’ Intermediate Assumptions)
revenues exceed costs. The OASI Trust Fund and DI Trust
Fund are legally distinct entities. They are discussed here
2021
2021
2022
collectively as the OASDI trust funds.
(projected) (actual) (projected)
Starting trust funds’
$2,908.3
$2,908.3
$2,852.0
A Board of Trustees manages the trust funds. The trustees
reserves
are required to report to Congress annually on the trust
Total revenue
1,073.8
1,088.3
1,195.8
funds’ status and financial operations. In general, the trust
Total costs
1,151.0
1,144.6
1,242.7
funds’ solvency—the ability to pay full benefits scheduled
Change in trust funds’
-77.3
-56.3
-46.8
under current law on a timely basis—indicates their status.
reserves
If assets held in the trust funds were to be depleted, the
Ending trust funds’
2,831.0
2,852.0
2,805.2
OASDI program could pay out in benefits only what it
reserves
receives in revenues. Table 1 shows the trust funds’ key
Source: CRS, based on the 2021 and 2022 OASDI trustees report.
https://crsreports.congress.gov
link to page 1 link to page 2 Social Security: Selected Findings of the 2022 Annual Report
Since 2010, total costs (i.e., scheduled benefits) have
2021, and the trustees decreased assumptions for future
exceeded noninterest revenue (i.e., tax revenues). In 2021,
disability incidence rates. As in previous years, a shifting of
total costs exceeded total revenues (i.e., tax revenues and
the 75-year valuation period—from 2021-2095 to 2022-
interest revenue). The same projection is made in this year’s
2096—means that a large negative annual balance for 2096
report (Table 1). If this projection were to be realized, the
is now included in the actuarial balance. However, this
trust fund asset reserves would continue to decrease. As
negative effect was more than offset by the positive effects
such, trust fund asset reserves are predicted to decline from
in changes to economic and disability data and
its peak value of $2.91 trillion in 2021 to $0 in 2035. Upon
assumptions.
the trust funds’ asset reserves depletion, the trustees project
that income from tax revenues would be sufficient to pay
Annual Balances
approximately 80% of scheduled benefits for the remainder
In the 2022 report, the trustees project the annual balances
of the projection period (2035-2096) versus 78% in 2021.
(i.e., difference between revenues and costs on an annual
basis) to reflect a smaller deficit (i.e., less negative) for all
Projected Long-Range Financial Outlook
years in the projection period. Similarly, the trustees
The 2022 report projects a long-range funding shortfall.
attribute the changes in annual balances to changes in
The funding shortfall is largely a result of rising costs over
economic factors and disability incidence rates. Over the
the 75-year projection period, primarily due to demographic
75-year projection period, annual balances are greater than
trends. The ratio of OASDI beneficiaries per 100 covered
last year’s report by an average of 0.18 percentage points.
workers, a common indicator of rising costs, is projected to
remain relatively the same as that in the 2021 annual report.
COVID-19
The 2021 report projected an average of 45.5 beneficiaries
The 2022 report acknowledged the “continuing significant”
per 100 covered workers over the 75-year projection; the
effects of the COVID-19 pandemic on the program’s near-
2022 report projects this ratio to be 45.4 beneficiaries per
term status and the pandemic’s uncertain long-term effects.
100 covered workers. Although the projected ratio of
However, the trustees state, “On balance, the projected
beneficiaries to workers remains relatively the same,
long-range actuarial status of the OASI and DI Trust Funds
program costs are projected to grow faster than program
has been little changed by the effects of the pandemic and
revenues. In 2021, the trustees estimated that costs would
ensuing recession, considering both the effects realized to
exceed revenues by 22.7% over the projection period. In
date and those yet expected.”
2022, the trustees estimate that costs will exceed revenues
by 22.0% over the next 75 years.
What Can Be Done?
The trustees project that in 13 years Social Security will be
If the total program revenues were to exceed total costs
unable to pay scheduled benefits in full and on time. To
annually, the program would have a surplus; if the total
illustrate the magnitude of changes needed to make Social
program costs were to exceed the total revenues, the
Security solvent over the next 75 years, the trustees
program would have a deficit. The trustees project the
estimate the hypothetical payroll tax increase or
program to have a deficit in 2022—just as in 2021—and for
hypothetical benefit reduction needed to maintain solvency
all remaining years in the 75-year projection period.
(Table 3). These hypothetical changes would take
immediate effect and apply to all current and future
The actuarial balance, a summarized measure of the annual
beneficiaries. The table also shows estimates for changes
surpluses and deficits over the projection period, is one
that would be needed at the projected 2035 insolvency date.
measure of the Social Security program’s long-range
financial position. When the actuarial balance results in
Table 3. Hypothetical Measures to Maintain Solvency
higher costs than revenues over the projection period, the
2021 Report
2022 Report
program is described as having an actuarial deficit. In
2021
2034
2022
2035
2021, the trustees estimated the long-range actuarial deficit
Payroll tax increase
over the next 75 years to average 3.54% of taxable payroll
(in percentage points
3.36 pp 4.20 pp 3.24 pp 4.07 pp
(i.e., total earnings subject to the OASDI payroll tax with
[pp])
some adjustments). In 2022, the trustees estimated the long-
Scheduled benefit
21%
26%
20%
25%
range actuarial deficit over the next 75 years to average
reduction
3.42% of taxable payroll. This amount represents the
Source: CRS, based on the 2021 and 2022 OASDI trustees report.
average increase in the payroll tax over the 75-year
projection period that would be needed for the program to
In the 2022 report, the size of the payroll tax increase and
pay full scheduled benefits on time.
benefit reduction needed to maintain solvency are smaller
than estimated in 2021. A noted parallel to last year’s report
The change in the estimated actuarial deficit, a decrease of
is that as time elapses, the magnitude of the changes needed
0.12% of taxable payroll, is mainly attributable to the
to maintain Social Security solvency increases. This
recent—and favorable—economic experience and changes
characteristic is attributable to the program’s rising costs
in disability data and assumptions. Although long-term
and suggests that the portfolio of legislative options to
economic assumptions were unchanged in this year’s
achieve solvency decreases as the trust funds approach the
report, updates to recent data, reflecting a stronger-than-
projected depletion date. As in many previous reports, the
expected recovery from the pandemic-induced recession,
trustees state, “Implementing changes sooner rather than
improved the long-range actuarial balance. Disabled-worker
later would allow more generations to share in the needed
application and incidence rates continued to drop during
revenue increases or reductions in scheduled benefits.”
https://crsreports.congress.gov
Social Security: Selected Findings of the 2022 Annual Report
IF12133
Barry F. Huston, Analyst in Social Policy
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https://crsreports.congress.gov | IF12133 · VERSION 1 · NEW