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GAO-23-106667 1 (2023-05-18)

handle is hein.gao/gaoora0001 and id is 1 raw text is: MAY 2023 GAO-23-106667 United States Government Accountability Office SOCIAL SECURITY SERIES PART 1: The Dilemma I. Overview Social Security pays out more money than it takes in. Source: GAO. GAO-23-106667 II. Why is Social Security Important? Social Security cash benefits help keep people out of poverty. Source: GAO. GAO-23-106667 Since its inception in 1935, Social Security has become a major source of income for millions of Americans In January 2023, over 57 million retirees and other individuals received Social Security benefits.2 For many retirees, Social Security makes up a substantial percentage of their overall retirement income. Significant financial challenges threaten the Social Security Administration's (SSA) long-term ability to continue to pay retirees and other beneficiaries full benefits.3 Specifically, costs for Social Security's benefit program for retirees, their dependents, and their survivors-costs that are paid from the Old-Age and Survivors Insurance (OASI) Trust Fund-have been exceeding the program's tax revenues since 2010 and are projected to continue doing so. Unless action is taken, the program is projected to be unable to pay full scheduled benefits in 10 years.4 The sooner actions are taken to address these financial challenges, the more gradually changes can be phased in and workers would have more time to adjust to any changes and factor them into their retirement plans. This is the first in a series of three reports that are intended to briefly outline (1) why policymakers need to address OASI's financial challenges, (2) criteria for evaluating options for reforming OASI, and (3) major types of reform that have been proposed. This first report focuses on OASI's financial challenges and draws on our past work examining Social Security and the nation's fiscal health as well as on data and projections from the 2023 Social Security Trustees Report.5 Social Security is considered the bedrock of the U.S. retirement system. The Social Security Act was enacted in 1935, in part, to help ensure that older Americans would have adequate income in retirement and not have to depend on welfare. Social Security provides cash benefits based on lifetime wages. These cash benefits replace a portion of an individual's earnings that are lost due to their retirement or death. For nearly 90 years, many American workers and their families have counted on these benefits to pay their bills and maintain their standard of living in retirement. Many Social Security beneficiaries rely on its benefits for the majority of their income while retired. In 2023, Social Security benefits will replace just over 71 percent of pre- retirement earnings for newly entitled beneficiaries with relatively low career average earnings of about $15,900 per year-these beneficiaries will receive about $11,300 in benefits for the year.6 Social Security benefits also represent a substantial percentage of some workers' total retirement income, ranging from 83 percent of income for the lowest income quintile (with a median income of about $14,400 per year) to 30 percent for the fourth income quintile (with a median income of just over $81,500 per year) in 2017.7 Of those receiving benefits in January 2023, 74 percent were retired workers who received an average annual benefit of nearly $22,000. GAO-23-106667 I Social Security Reform Series

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