"Today, the Social Security Trustees released their 2011 report on the financial status of both Social Security and Medicare. The reports make clear that both programs are on unsustainable paths, and reforms will be necessary to make them solvent. This analysis focuses on the financial status of Social Security."
Social Security Trust Fund Ratios
"The reports measure the short-range adequacy of the OASI, DI, and HI Trust Funds by comparing fund assets to projected costs for the ensuing year (the "trust fund ratio"). A trust fund ratio of 100 percent or more -- that is, assets at least equal to projected costs for a year -- is a good indicator of a fund’s short-range adequacy. That level of projected assets for any year means that even if cost exceeds income, the trust fund reserves, combined with annual tax revenues, would be sufficient to pay full benefits for several years.
By this measure, the OASI Trust Fund is financially adequate throughout the 2011-20 period, but the DI Trust Fund fails the short-range test because its projected trust fund ratio falls to 90 percent by the beginning of 2013, followed by exhaustion of assets in 2018. Furthermore, despite the increasing nominal value of the OASI and combined OASDI trust funds throughout the short-range period, both the OASI and DI trust fund ratios -- indicators of the duration of continuing benefit payments that the trust funds could finance out of current assets -- will continue to decline from 2011 forward.
The HI Trust Fund also does not meet the short-range test of financial adequacy; its projected trust fund ratio falls to 86 percent by the beginning of 2012. Projected HI Trust Fund assets are fully depleted in 2024. Chart D shows the trust fund ratios through 2040 under the intermediate assumptions."
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