Yesterday, the Congressional Budget Office released new long-term Social Security projections (pdf):
"CBO projects that outlays will first exceed revenues in 2019 and that the Social Security trust funds will be exhausted in 2049. If the law remains unchanged, the Social Security Administration (SSA) will then no longer have the legal authority to pay full benefits."
"CBO's projections indicate that future Social Security beneficiaries will receive larger benefits in retirement -- and will have paid higher payroll taxes -- than current beneficiaries do, even after adjustments have been made for inflation and even if the scheduled payments are reduced because the trust funds are exhausted. However, CBO estimates that under both scenarios, those benefits will represent a smaller percentage of beneficiaries' preretirement earnings than is the case now."
According to the CBO projections, "the 75-year actuarial imbalance in the program amounts to 0.38 percent of GDP, or 1.06 percent of taxable payroll." This sounds rather manageable.
One interesting note: like any attempt to project the economy decades into the future, long-term Social Security projections are bound to be inaccurate. It's therefore always interesting to see how they change over time, as we inch closer to the dates they're talking about. In 2006, the CBO projected (pdf) that the Social Security trust funds would be exhausted in 2046. Apparently, during the last two years, the date when the Social Security trust funds will be exhausted has been pushed three years further into the future. At this rate, if we keep on doing nothing, that date will never arrive at all.
The point is not that we should keep on doing nothing forever. (Maybe we can; maybe we can't.) It's that since we're talking about a rather manageable problem involving economic projections decades into the future, we can afford to wait and see how accurate our assumptions are.