Social Security doomsayers are wrong again

The pandemic-induced recession worsened the trust fund outlook, but just a bit

The federal government recently released its annual report on the health of Social Security. So naturally, that meant it was time for the media to cue up the clickbait headlines.

Some of the forecasters didn’t even wait for the report. Social Security will soon be insolvent, they warned in advance! Insolvency is coming years earlier than we thought! Benefit cuts are a real possibility!

These panicky predictions appear every year around the time when the trustees overseeing Social Security issue their report on the financial health of the program, and this year was no exception. The pandemic-induced recession of 2020 added a new twist, since many forecasters were predicting even last year that COVID-19 would dramatically worsen the financial outlook for Social Security.

Guess what: it didn’t happen. But the U.S. Congress does need to address a long-range imbalance in Social Security finances - and lawmakers should expand benefits in a targeted way while they are at it.

Last year, the dramatic fall in employment and earnings in the second quarter of 2020 did translate into lower Federal Insurance Contributions Act (FICA) revenue paid into the system by workers and employers - temporarily. And the pandemic did worsen the financial health of Social Security, but just a bit. The trustees project that the reserves of the combined Social Security retirement and disability trust funds will be depleted in 2034 - one year earlier than predicted a year ago.

“We were all expecting substantially lower earnings and employment throughout the year,” said Stephen C. Goss, chief actuary of the Social Security Administration, during a webinar discussion of the trustee report convened last week by the National Academy of Social Insurance (NASI). “In fact, the earnings and employment came back more rapidly than we and others had anticipated.”

Learn more in my latest column for Reuters. You can view the entire NASI webinar here:

What I’m reading

False diagnoses conceal drugging of frail seniors in nursing homes . . . The suckers at the investment table . . . Many older Americans still aren’t vaccinated, making the Delta wave more deadly . . . Grandfamily housing caters to older Americans raising children . . . The behind-the-scenes campaign to be the next Social Security commissioner . . . That $56,000 Alzheimer’s drug? Blame Medicare . . . Seeking early signals of dementia in driving and credit scores . . . Gray hair is fine, bad grammar is (still) not) . . . Will hearing aids ever be hip?