At the end of 2021, the OASDI program was providing benefit payments
1 to about 65 million people: 50 million retired workers and dependents of retired workers, 6 million survivors of deceased workers, and 9 million disabled workers and dependents of disabled workers. During the year, an estimated 179 million people had earnings covered by Social Security and paid payroll taxes on those earnings. The total cost of the program in 2021 was $1,145 billion. Total income was $1,088 billion, which consisted of $1,018 billion in non-interest income and $70 billion in interest earnings. Asset reserves held in special issue U.S. Treasury securities declined from $2,908 billion at the beginning of the year to $2,852 billion at the end of the year. The total cost and change in asset reserves shown for 2021 reflect the twelve months of benefits scheduled for payment, and include the benefits scheduled for payment on January 3, 2021, which were actually paid on December 31, 2020 as required by the law.
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The reserves of the combined OASI and DI Trust Funds along with projected program income are sufficient to cover projected program cost over the next 10 years under the intermediate assumptions. However, the ratio of reserves to annual cost is projected to decline from 230 percent at the beginning of 2022 to 74 percent at the beginning of 2031. Because this ratio falls below 100 percent by the beginning of the 10th projection year, the combined OASI and DI Trust Funds fail the Trustees’ test of short-range financial adequacy. Considered separately, the OASI Trust Fund fails this test, but the DI Trust Fund satisfies the test. For last year’s report, the Trustees projected that combined reserves would be 231 percent of annual cost at the beginning of 2022 and 66 percent at the beginning of 2031.
Under the Trustees’ intermediate assumptions, OASDI cost is projected to exceed total income in 2022, and the dollar level of the hypothetical combined trust fund reserves declines until reserves become depleted in 2035. Figure II.D2 shows the implications of reserve depletion for the combined OASI and DI Trust Funds. Considered separately, the OASI Trust Fund reserves become depleted in 2034, and, for the first time since the 1983 Trustees Report, the DI Trust Fund reserves do not become depleted within the 75-year long-range projection period.
3 In last year’s report, the projected reserve depletion years were 2034 for OASDI, 2033 for OASI, and 2057 for DI. The level of DI reserves is very sensitive to changes in program cash flows and interest.
To illustrate the magnitude of the 75-year actuarial deficit, consider that for the combined OASI and DI Trust Funds to remain fully solvent throughout the 75-year projection period ending in 2096: (1) revenue would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 3.24 percentage points
4 to 15.64 percent beginning in January 2022; (2) scheduled benefits would have to be reduced by an amount equivalent to an immediate and permanent reduction of 20.3 percent applied to all current and future beneficiaries effective in January 2022, or 24.1 percent if the reductions were applied only to those who become initially eligible for benefits in 2022 or later; or (3) some combination of these approaches would have to be adopted.