Each year the trustees of the Social Security system issue a report on the system’s financial condition. The 2012 report is out, and N.C. State University economist Mike Walden says the news it contains is not good.
“Well, I guess you’d have to call it bad news … because what the report has said is that the Social Security trust fund over the last year has deteriorated. And the way that this is measured is to look at how long it’s going to take to exhaust the reserves.
“Actually, Social Security has some savings, if you will, but how long it’s going to take those savings to be exhausted and for Social Security essentially to just have to run on fumes — what it collects each year — for that part of Social Security that funds disabilities, the date is very close. It’s 2016. That is the trust fund for the Social Security Disability Fund is expected now to run out by 2016 — earlier than projected even last year.
“And for the part of Social Security that goes to paying pensions to retirees, that part is expected now to run out by 2035 — again, a couple of years earlier than was estimated last year.
“Now I should say that both of these dates are based on assumptions; a lot of assumptions have to go into forecasting: One, for example, those trust funds will run dry. Reality could be worse, in which case those trust funds will run out earlier, or it could be better, in which case they could run out later.
“But I think what this does say is we do have a looming issue for both the disability fund as well as the pension fund in Social Security. And the quicker we address that, the better.”