CBO – Social Security Policy Options 2015 – “Social Security, which marked its 80th anniversary in 2015, is the largest single program in the federal government’s budget. The program has two parts: Old-Age and Survivors Insurance (OASI), which pays benefits to retired workers, to their dependents and survivors, and to some survivors of deceased workers; and Disability Insurance (DI), which makes payments to disabled workers and to their dependents until those workers reach the age at which they are eligible to receive full retired-worker benefits under OASI. Social Security currently has about 60 million beneficiaries. Outlays for Social Security totaled $888 billion in fiscal year 2015, accounting for nearly one-quarter of all federal spending. Although Social Security is part of the overall federal budget, its funding mechanism of dedicated revenues sets it apart from many other government programs. Benefits for OASI and DI alike are financed from trust funds (often identified collectively as the combined, or OASDI, trust funds), which are credited with tax revenues, mainly from payroll taxes, and interest on the funds’ balances.1 As long as a trust fund’s balance is sufficient to cover required payments, benefits can be paid without the need for any legislative action. What Are the Prospects for Social Security’s Finances? In 2010, for the first time since the enactment of the Social Security Amendments of 1983, annual outlays for the program exceeded annual revenues (excluding interest) credited to the combined trust funds. A gap between those amounts has persisted since then, and in fiscal year 2015 outlays exceeded tax revenues by almost 9 percent. As more people in the baby-boom generation retire over the next 10 years, the Congressional Budget Office projects, the gap will widen between amounts credited to the trust funds and payments to beneficiaries. If current laws governing Social Security taxes and benefits stay generally the same and if all benefits are paid in full—an assumption that underlies CBO’s extended baseline projections—outlays for the Social Security program will exceed noninterest revenues by almost 30 percent in 2025 and by more than 40 percent in 2040…”

• CBO’s 2015 Long-Term Projections for Social Security: Additional Information