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Monday March 19, 2001

Carolyn Cheezum

For Immediate Release

410-965-8904 FAX 410-966-9973


Social Security Online

SOCIAL SECURITY

News Release

Social Security Trust Funds Gain
One Additional Year of Solvency

The Social Security Board of Trustees today released its annual report on the long-term financial health of the Social Security Trust Funds. The 2001 Trustees' Report projects that the Social Security program will remain solvent until 2038 - one year later than reported last year.

"The additional year of solvency is good news. However, we should both maintain fiscal discipline and move forward on a bipartisan basis to strengthen Social Security to face the challenges presented by the Baby Boom generation's retirement," said William A. Halter, Acting Commissioner of Social Security.

Social Security ran a surplus of $153 billion in 2000 and ended the year with $1.049 trillion in assets. Annual Trust Fund revenues are projected to exceed expenditures until 2016, a year later than estimated in last year's Trustees' report.

Acting Commissioner Halter stated, "Social Security is the major source of income for two-thirds of older Americans and virtually the only source of income for one-third of older Americans. In a real sense, Social Security is the most important income security program in American history. We should utilize this period of Social Security surpluses to fashion the legislative changes necessary to extend the solvency of the system for future generations."

Beginning in 2025, assets of the combined Old-Age and Survivors Insurance and Disability Insurance Trust Funds will be drawn down to pay benefits until the funds are exhausted in 2038. Over the 75-year long-range actuarial period, the projected actuarial balance is a deficit of 1.86 percent of taxable payroll, compared to 1.89 percent projected in 2000.

Based on the most recent experience, the Social Security Trustees made some small adjustments in the demographic and disability assumptions used in last year's report, resulting in the one-year change to the exhaustion date of the combined trust funds. Data accumulated since last year's report indicate that the death rate declined recently at a slower pace than estimated for the 2000 report. An update of disability data resulted in a lower overall rate of disability incidence than was projected in last year's report. These two factors together acted as the main force behind extending the combined Trust Fund exhaustion date from the 2037 projected in the 2000 report to 2038 in the 2001 Trustees' Report.

In their 2001 Annual Report to Congress, the Trustees also reported the following:

  • The Old-Age and Survivors, and Disability Insurance Trust Funds paid benefits amounting to $407.6 billion in calendar year 2000, and there were 45.4 million beneficiaries on the rolls at the end of 2000;

  • In 2000, an estimated 154 million people worked in jobs covered by Social Security;

  • Income to the combined Trust Funds amounted to $568.4 billion in 2000 and expenditures were $415.1 billion, increasing the assets of the combined funds by $153.3 billion to $1,049.4 billion at the end of 2000;

  • Interest earned on the invested assets of the combined Trust Funds was $64.5 billion in 2000, representing an effective annual interest rate of 6.9 percent. The average interest rate on the new securities purchased by the Trust Funds was 6.2 percent; and

  • Administrative expenses were $3.8 billion in 2000, or about .6 percent of total income for the year. For OASI, administrative expenses were about .4 percent of total income for the year.

The Board of Trustees is composed of six members, four of whom serve automatically by virtue of their positions with the federal government: the Secretary of the Treasury, who is the managing Trustee; the Secretary of Labor; the Secretary of Health and Human Services; and the Commissioner of Social Security. The other two members are appointed by the President and confirmed by the Senate to serve as public representatives: John L. Palmer and Thomas R. Saving.

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