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Social Security costs to outweigh income by next year; benefits may be cut by 2035

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These details are from a report by the trustees in charge of the program

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According to a report from the Social Security Administration, the program's cost will exceed its income in 2020. If nothing changes by 2035, Social Security will be unable to continue to pay full benefits.

What does the report say?

According a new report released Monday by the board of trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, which oversees Social Security, "Social Security's total cost is projected to be less than its total income in 2019 and higher than its total income in 2020 and all later years."

This report also said that beginning in 2020, "the dollar amount of the hypothetical combined trust fund reserves declines until reserves become depleted in 2035." The Disability Insurance Trust Fund reserves would run out completely by 2052.

Of course, these projections only apply if the system itself continues unchanged, with income and expenditures going exactly as predicted. Part of the purpose of this report was for Congress to work to "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."

The amount of revenue that the Social Security Administration raises in taxes compared to the amount it pays out in benefits continues to shrink as the baby boomer generation retires.

The funds raised by the program go into a Treasury Department Trust Fund. The Treasury then issues bonds to the Social Security Administration, which the Social Security Administration assures taxpayers are "backed by the full faith and credit of the U.S. Government" and "just as safe as U.S. Savings Bonds or other financial instruments of the Federal government."

However, since the money in these trust funds is also being spent on other government projects, critics have accused the whole system of being built on IOUs.

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