Tue, May 17, 2011
Social Security Trustees Project Increased Wage Base in 2012
Late last week, the Board of Trustees of the trust fund that covers Social Security and Medicare issued its annual report for 2011.
At 244 pages, the report is certain to thrill the hearts of number-crunchers for weeks to come.
One projection with immediate relevance is that the Social Security wage base is likely to rise from $106,800 to $110,400 in 2012. The “wage base” is the maximum income on which workers are required to pay Social Security taxes and is adjusted in response to inflation. If the projection of the Social Security Administration’s Chief Actuary is correct, it will be the first time that the wage base has risen since 2009.
The report also notes the impact of economic weakness on the program’s non-interest income last year. In coming years, the annual shortfall between Social Security’s non-interest income and its expenses is projected to shrink from $46 billion this year to $20 billion in 2012-2014.
Starting in 2014, the increased number of retiring Boomers is expected to swell the shortfall between income and payout. This year’s report projects that the Social Security trust fund will be exhausted in 2036 – one year earlier than was projected last year. At that point, benefit payouts would need to be reduced to 77% of current projections.
There is, however, an even more urgent concern - the disability fund. This part of the trust is expected to run out in 2018, leading the Trustees to suggest that more funds be allocated to the disability portion of the trust in the near term.