Long Range Solvency Provisions (2024)

FAQs

What is the solvency of the Social Security program? ›

Remain Solvent

“Solvency” refers to the ability of the Trust Funds to pay 100 percent of currently scheduled benefits. The Social Security Trustees Report is produced by actuaries at the Social Security Administration (SSA) primarily for policymakers and for the benefit of the public.

More than half of female beneficiaries over age 60 will receive benefits based solely on their own work in 2025. By 2095, over 70 percent of women will receive such benefits. Over one-third of women will be dually entitled (receive a benefit based both on their own and their spouse's work) in 2025.

The portions depend on the year in which a worker attains age 62, becomes disabled before age 62, or dies before attaining age 62. For 2024 these portions are the first $1,174, the amount between $1,174 and $7,078, and the amount over $7,078. These dollar amounts are the "bend points" of the 2024 PIA formula.

In the proposals presented to the Commission, the use of retirement bonds--and annuities based on bond accumulations- would also replace the entire benefit structure of Social Security for the future.

Social Security is Only 11 Years from Insolvency

The SSDI trust fund is in much stronger shape and will remain solvent over the next 75 years. On a theoretically combined basis – assuming revenue is shared between the trust funds – the Social Security program will become insolvent by 2034.

Even though Social Security isn't expected to run out of money until 2034-35, several options for changes have already been floated to deal with the budget shortfall. These options include: Raising the payroll tax rate. Increasing the wages subject to Social Security taxes.

Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.

If changes are not made very soon to the Social Security system, Zigmont said, retirees in 2050 will be getting reduced payments — if they get payments at all. On the other hand, people who plan for their own retirement and look at Social Security as a bonus may be well off, Zigmont said.

By looking at historical data on annual hikes in Social Security payments, the average monthly payment for retirees by 2030 is expected to have climbed to more than $2,000, according to an analysis by Better Benefits Guide.

The Windfall Elimination Provision

The WEP reduces the Social Security benefits of certain retired or disabled workers who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security—and thus not subject to the Social Security payroll tax.

What is the maximum Social Security payout at age 65? ›

Key Takeaways. Qualifying for Social Security requires ten years of work or 40 work credits. The maximum benefit is $3,822 for someone at full retirement age in 2024. Individuals must wait until full retirement age to claim benefits and have been a high earner for 35 years to earn the maximum Social Security benefit.

The maximum Social Security benefit at full retirement age is $3,822 per month in 2024. It's $4,873 per month in 2024 if retiring at age 70 and $2,710 if retiring at age 62.

The Social Security five-year rule is the time period in which you can file for an expedited reinstatement after your Social Security disability benefits have been terminated completely due to work.

Millennials may receive less Social Security than older generations, as the reserve of funds gets depleted due to a declining number of U.S. workers contributing to the benefits pool. Millennials can fully retire at age 67, but to get the most out of Social Security benefits, you should wait until age 70 to collect.

Current workers will still receive Social Security benefits after the trust fund's reserves become depleted in 2034, but it's possible that future retirees will only receive 78% of their full benefits unless Congress acts.

But the biggest chunk of those “intragovernmental holdings” belongs to Social Security. As of the end of January, the program's retirement and disability trust funds together held more than $2.8 trillion in special non-traded Treasury securities, or 9% of the total debt.

As of 2021, the Trust Fund contained (or alternatively, was owed) $2.908 trillion. The Trust Fund is required by law to be invested in non-marketable securities issued and guaranteed by the "full faith and credit" of the federal government. These securities earn a market rate of interest.

She added that the Treasury might reduce the payments — maybe to 50% or 75% of what's been promised. “It could take both approaches. Which one it takes depends on what executive branch officials decide, and they will likely prioritize creditors and recipients of entitlement programs,” Erkulwater said.

Yes, the federal government borrows Social Security funds, but it is required to pay the money back with interest.