CBO'S 2011 LONG-TERM PROJECTIONS FOR SOCIAL SECURITY

The most recent Congressional Budget Office (CBO) publication provides additional information about long-term projections of the Social Security program's finances that were included in CBO's 2011 Long-Term Budget Outlook (June 2011). Those projections, which cover the 75-year period spanning 2011 to 2085, and the additional information presented in this document update projections CBO prepared last year and reported in CBO's 2010 Long-Term Projections for Social Security: Additional Information.

"In calendar year 2010, for the first time since the enactment of the Social Security Amendments of 1983, annual outlays for the program exceeded annual revenues excluding interest credited to the trust funds. CBO projects that the gap will continue: Over the next five years, outlays will be about 5 percent greater than such revenues. However, as more members of the baby-boom generation (that is, people born between 1946 and 1964) enter retirement, outlays will increase relative to the size of the economy, whereas tax revenues will remain at an almost constant share of the economy. As a result, the shortfall will begin to grow around 2017.

CBO projects that the DI trust fund will be exhausted in 2017 and that the OASI trust fund will be exhausted in 2040. Once a trust fund's balance has fallen to zero and current revenues are insufficient to cover the benefits that are specified in law, the corresponding program will be unable to pay full benefits without changes in law. The DI trust fund came close to exhaustion in 1994, but that outcome was prevented by legislation that redirected revenues from the OASI trust fund to the DI trust fund. In part because of that experience, it is a common analytical convention to consider the DI and OASI trust funds as combined. CBO projects that, if legislation to shift resources from the OASI trust fund to the DI trust fund was enacted, the combined OASDI trust funds would be exhausted in 2038."

If you feel legislation will be enacted that can fix this problem, then move on to the next post. However, if you're like me, then you already know the odds that you will see any of the contributions you made over your working life by the time you retire. How confident are you about how much you'll receive from your retirement savings plan?

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