Status of the Social Security and Medicare Programs
Each year the Trustees of the Social Security and Medicare trust funds report on the current and projected financial status of the two programs. This message summarizes our 2011 Annual Reports.

An Actuarial Perspective on the 2011 Social Security Trustees' Report–"The newly released 2011 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds indicates that the Social Security trust fund exhaustion date is one year sooner than projected in the 2010 Trustees' Report. The trust fund is projected to run out of assets during 2036, and if reform has not been enacted by that date, benefits would have to be reduced by about one-fourth thereafter. "

The 2010 OASDI Trustees Report–"The 2010 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds," presents the current and projected financial status of the trust funds.

The Social Security Squeeze Can Be Solved– Businessweek.com's Chris Farrell says the program's shortfall is far easier to fix than Medicare or Medicaid—and smart policy could make it even stronger in the years ahead.

The Future Financial Status of The Social Security Program–The concepts of solvency, sustainability, and budget impact are common in discussions of Social Security, but are not well understood. Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits. This increase in cost results from population aging, not because we are living longer, but because birth rates dropped from three to two children per woman. Importantly, this shortfall is basically stable after 2035; adjustments to taxes or benefits that offset the effects of the lower birth rate may restore solvency for the Social Security program on a sustainable basis for the foreseeable future. Finally, as Treasury debt securities (trust fund assets) are redeemed in the future, they will just be replaced with public debt. If trust fund assets are exhausted without reform, benefits will necessarily be lowered with no effect on budget deficits.

For Social Security, A Birthday Makeover–The Social Security System is celebrating its 75th anniversary in 2010. The August 22, 2010 edition of the New York Times includes six opinions about how to fix Social Security. The headlines for each of the opinions are:

• Employers Should Pay Up
• Chile's Way
• Keep up with Retirees' Costs
• The Fix: Plenty of Young People
• Cut Benefits, but do it Fairly
• 62 is Too Young

The Future Financial Status of the Social Security Program–The concepts of solvency, sustainability, and budget impact are common in discussions of Social Security, but are not well understood. Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits. This increase in cost results from population aging, not because we are living longer, but because birth rates dropped from three to two children per woman. Importantly, this shortfall is basically stable after 2035; adjustments to taxes or benefits that offset the effects of the lower birth rate may restore solvency for the Social Security program on a sustainable basis for the foreseeable future. Finally, as Treasury debt securities (trust fund assets) are redeemed in the future, they will just be replaced with public debt. If trust fund assets are exhausted without reform, benefits will necessarily be lowered with no effect on budget deficits.

Facing Pension Woes, Maine Looks to Social Security–Although most states put their workers in the federal plan along with the state pension, Maine has relied solely on their state pension plans. Maine has not prepared a plan to shift state employees into Social Security.

Retirement Age from the Viewpoint of Economic and Social Policy–A cost benefit analysis of increasing social security retirement age as a solution to bringing the actuarial values of future benefits and future contributions in balance over a 75 year period.