WASHINGTON – The severe economic downturn caused by last year’s Covid-19 pandemic affected Social Security’s financial health, but not much of what many forecasters feared, according to new program finance projections.
Managers of the Social Security trust fund in an annual report released Tuesday said the program is expected to pay benefits that exceed its income by 2021, the same as expected last year at the start of the pandemic.
Although the pandemic had a significant impact on the program, administrators said, they expect Social Security reserves to run out by 2034, just a year earlier than they estimated in their April 2020 report. Once the reserves are exhausted, the benefits will be automatically reduced unless Congress intervenes to strengthen the program.
Managers now project high pandemic-related mortality rates through 2023 and expect lower immigration and motherhood this year and next, compared to their 2020 estimates. They also expect the pandemic to have reduced worker productivity. and therefore economic production on a permanent basis.
“These data alterations and short-term assumptions significantly affect program prospects,” the report said.