The Old-Age, Survivors and Disability Insurance (OASDI) program plays a significant role in the lives of many Americans. In 2022, it provided monthly benefits to 51 million retired workers and their dependents, 9 million disabled workers and their dependents, and the dependents of 6 million deceased workers.

In 2022, the program spent $1.24 trillion and took in $1.22 trillion. From here on out, the program's spending is expected to exceed its funding. Under current assumptions, the trust fund will be depleted by 2034 – unless something changes.

An issue brief from the American Academy of Actuaries (AAoA) stated, "If Congress has not acted by 2034, we will be faced with an automatic 20% cut in benefits to people already receiving benefits, the need to immediately increase Social Security taxes by 25%, or some combination of cuts in benefits and increases in taxes." The AAoA discussed options for keeping Social Security solvent, including:

• Increase the payroll tax rate by 25 percent. Currently, the payroll tax rate is 15.3 percent on up to $160,200 of a workers' income. The worker pays half, and the employer pays half. This would cover 100 percent of the 2034 shortfall.
• Raise or eliminate the wage limit ($160,200 in 2023). This would cover 36 percent to 78 percent of the 2034 shortfall.
• Increase Social Security's investment income by investing a portion of the money raised through taxes in equities.
• Tax Social Security benefits similarly to the way pensions are taxed. This would cover 8 percent of the 2034 shortfall.
• Reduce benefits for higher income recipients who are not yet eligible for benefits. This would cover 10 percent or less of the 2034 shortfall.
• Raise the retirement age for future recipients. If normal retirement age is raised to 69 by 2034, it would cover about 10 percent of the shortfall.

Many Americans are concerned about the future of Social Security. According to a survey conducted by Republican firm North Star Opinion Research, Democratic firm Global Strategy Group, and the nonpartisan Peter G. Peterson Foundation:

• 97 percent of Democratic participants and 97 percent of Republican participants want Congress to "reform Social Security and ensure it's available for current retirees and younger generations."

It's uncertain whether Congress will address Social Security funding before automatic cuts take place. If you would like to talk about the role of Social Security in your retirement plan, please get in touch.