2024 OASDI Trustees Report

E. CONCLUSION

The data and projections presented in this report continue to include the Trustees’ best estimates of the future course of the population, the economy, and all aspects of the OASDI program under current law. Since the assumptions for last year’s report were set, the Trustees have reassessed their expectations based on recent experience and have made changes to the intermediate assumptions in three primary areas: (1) lowering the ultimate total fertility rate, (2) lowering the ultimate disability incidence rate, and (3) increasing the level of labor productivity over the projection period, given that economic growth in 2023 exceeded the Trustees’ expectations for that year.

The intermediate (best estimate) assumptions for this report were set in December 2023. The Trustees will continue to monitor developments and modify the projections in later reports.

Based on the Trustees’ intermediate assumptions, Social Security’s cost exceeds total income in 2024, as it has since 2021, and remains higher than income throughout the remainder of the 75‑year projection period. The projected cost of Social Security increases much more rapidly than taxable payroll through about 2040 primarily because of a decline in the ratio of workers paying taxes to beneficiaries receiving benefits as the baby-boom generation continues to retire and is replaced at working ages with subsequent lower birth-rate generations. Between about 2040 and 2080, the OASDI cost rate continues to grow, but at a slower pace than prior to 2040. After 2080, the OASDI cost rate declines and then roughly stabilizes. These patterns in the cost rate are largely driven by the effect of birth rates on the age distribution of the adult population.

The OASI Trust Fund is projected to have sufficient reserves to pay full benefits on time until 2033. The DI Trust Fund is projected to have sufficient reserves to pay full benefits throughout the 75-year projection period ending in 2098. Legislative action will be needed to prevent OASI reserve depletion. In the absence of such legislation, continuing income to the trust funds at the time of reserve depletion would be sufficient to pay 79 percent of OASI benefits.

Social Security’s combined trust funds are projected to cover full payment of scheduled benefits on a timely basis until the trust fund reserves become depleted in 2035. Full payment of benefits until depletion of the hypothetical combined reserves in 2035 implicitly assumes that the law will have been changed to permit the transfer of funds between OASI and DI as needed. At the time of reserve depletion, projected continuing income to the combined trust funds equals about 83 percent of the program cost. By 2098, continuing income equals about 73 percent of the program cost.

The actuarial deficit for the combined trust funds under the intermediate assumptions is 3.50 percent of taxable payroll for the 75-year period through 2098, which is smaller than the deficit of 3.61 percent for the 75-year period through 2097 in last year’s report. To illustrate the magnitude of the deficit, consider that for the combined OASI and DI Trust Funds to remain fully solvent throughout the 75-year projection period ending with 2098: (1) revenue would have to be increased by an amount equivalent to an immediate and permanent payroll tax rate increase of 3.33 percentage points to 15.73 percent; (2) scheduled benefits would have to be reduced by an amount equivalent to an immediate and permanent reduction of 20.8 percent applied to all current and future beneficiaries through 2098, or 24.8 percent if the reductions were applied only to those who become initially eligible for benefits in 2024 or later; or (3) some combination of these approaches would have to be adopted. If actions are deferred for several years, the changes necessary to maintain Social Security solvency through 2098 become concentrated on fewer years and fewer generations.

If lawmakers design legislative solutions only to eliminate the overall actuarial deficit without consideration of year-by-year financing, then a substantial financial imbalance could remain for 2098, the end of the 75-year valuation period. In that case, the long-range sustainability of program financing could still be in doubt. Sustainable solvency for the financing of the program under a specified set of assumptions is achieved when the projected trust fund ratio is positive throughout the 75-year long-range period and is either stable or rising at the end of the period. Making changes now that achieve sustainable solvency could avoid the need for later legislative changes.

Lawmakers have a broad continuum of policy options that would close or reduce Social Security's long-term financing shortfall. Estimates for many such policy options are available at www.ssa.gov/OACT/solvency/provisions/. Broadly speaking, the approaches that lawmakers can take include increasing revenue from workers and employers by raising the tax rate or the maximum level of taxable earnings, or by dedicating revenue from other sources; lowering benefits for some or all beneficiaries by changing certain program parameters; or a combination of these approaches. There are many variations on these options, including those that vary the timing, magnitude, and other specifics of the changes under consideration.

The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them. Implementing changes sooner rather than later would allow more generations to share in the needed revenue increases or reductions in scheduled benefits. Social Security will play a critical role in the lives of 68 million beneficiaries and 184 million covered workers and their families during 2024. With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations.

For further information related to the contents of this report, see the following websites:

•	www.ssa.gov/OACT/tr/2024/

•	https://www.ssa.gov/OACT/solvency/provisions/

•	https://www.cms.gov/OACT/TR

•	home.treasury.gov/policy-issues/economic-policy/social-security-and-medicare-trustee-reports