April 22 (UPI) -- The Social Security Administration's annual trustees report issued a stern warning Monday -- costs will exceed revenues next year for the first time in nearly 40 years.
The trustees report said last year's $1.03 trillion in income barely exceed $1 trillion in expenses, and "both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing." Although costs have not exceeded expenses since 1982, the report predicts costs will be higher next year and throughout the 75-year projection period.
The 270-page report said combined resources of the SSA's Old-Age, Survivors, and Disability Insurance program "declines until reserves become depleted in 2035." It added, though, that the OASI Trust Fund for retirees has reserves to pay full benefits until 2034. It said the DI Trust Fund, paying benefits to disabled workers, is financially secure until 2052.
While the OASI program has over $2.8 trillion in reserves, it began depleting in 2018, with $831 billion in income and $853.5 billion in costs and expenditures.
The report specifically noted "the ratio of workers paying taxes to beneficiaries receiving benefits will decline as the baby-boom generation ages and is replaced at working ages with subsequent lower birthrate generations." It added the situation should stabilize by 2040 but annual costs will still grow faster than income, to a lesser degree, it said.
The report recommended only that correction of the shortfall is a legislative issue. A summary, signed by the trustees -- Treasury Secretary Steven Mnuchin, Health and Human Services Secretary Alex Azar, Labor Secretary Alexander Acosta and Acting Social Security Commissioner Nancy Berryhill -- advised that "lawmakers have many policy options that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare. Lawmakers should address these financial challenges as soon as possible."