Social Security’s Financial Outlook: The 2013 Update in Perspective

The 2013 Trustees Report – unlike last year – contains no surprises. Last year’s report showed a big jump in the program’s 75-year deficit in the wake of the slow recovery from the recession and rising disability rolls. This year’s report shows essentially no change in the deficit – just a tiny uptick from 2.67 percent of taxable payroll to 2.72 percent – and the date of trust fund exhaustion continues to be 2033. While the deficit remains larger and the date of exhaustion nearer than before the recession, the story remains the same. The program faces a manageable shortfall over the next 75 years, which should be addressed soon to restore confidence in the nation’s major retirement program and to give people time to adjust to needed changes. This brief updates the numbers and puts the current report in perspective. It also discusses the projected exhaustion of the Disability Insurance Trust Fund in 2016 and developments on the long-run solvency front – namely, the expiration of the 2-percentage-point reduction in the employee’s portion of the payroll tax and the President’s proposal to move to a “chained” Consumer Price Index (CPI) to adjust benefits.