New issue brief: “Social Security’s Financial Outlook: The 2016 Update in Perspective”

The Center for Retirement Research at Boston College has released a new Issue in Brief:

“Social Security’s Financial Outlook: The 2016 Update in Perspective”

by Alicia H. Munnell

The brief’s key findings are:

• The 2016 Trustees Report shows virtually no change:
  • Social Security’s 75-year deficit is 2.66 percent of payroll, just a hair below the 2015 projection.
  • The deficit as a percentage of GDP remains at about 1 percent.
  • Trust fund exhaustion is still 2034, after which payroll taxes still cover about three quarters of promised benefits.

• The shortfall is manageable, but action should be taken soon to restore confidence in the program and give people time to adjust to needed changes.
• Also of note, the Bipartisan Budget Act of 2015 did two things:
  • It reallocated payroll taxes to extend the life of the DI trust fund.
  • It helpfully eliminated claiming loopholes, which had a small positive effect on program finances.

The brief is available here.