How Healthy Is Social Security? Let Us Get Back to You...

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Social Security faces some serious financial challenges and even as solutions have been hard to come by, the day of reckoning for the Social Security program gets closer every year. In order to gauge the current health of Social Security, the trustees of the program's Trust Fund are required by law to issue an annual report on its financial status. For the seventh year in a row, however, the report is late, and there's no way to tell when the 2015 Social Security Trustees Report might get released. The question many people have is whether you should worry about your Social Security benefits in light of the delay. Although there's no reason to panic, let's look more closely at this key report and its chronic tardiness.

Just How Late Is the Report?

The law that set up the Social Security Trust Fund establishes an April 1 due date for each year's report on the health of the program. The report must include information on what happened to the Trust Fund over the course of the last year, as well as make projections on the operation and status of the Trust Fund in the coming five-year period.

The Social Security trustees have a terrible track record over the past decade in getting the report out in timely fashion. Until 2005, the report typically was available in late March, getting in just under the wire. But in 2006, the report was a month late, and 2007's report came in a few weeks after the deadline as well.

Since then, the Social Security trustees have been much more egregious in the delay between the April 1 requirement and when they actually got around to getting the report in. Last year's report was dated July 28, nearly two months later than the 2013 report had been with its May 31 date. That continued a trend toward later reports, with the 2012 report having made it to the Ways and Means Committee on April 25, while the 2011 report was dated May 13.

Even last year's report wasn't the latest ever. Five years ago, the Social Security Trustees Report for 2010 wasn't made available until August 9.

There's No Reason for Concern

It's reasonable to assume that when a report is late, it might be because there's bad news coming. Yet regardless of when this year's version of the Social Security Trustees Report ends up coming out, past experience shows no connection between how late the report is and how good or bad its contents are for the health of the Social Security program. In the year when the report was released the latest, the Social Security Trustees made no change to their assessment of when the Trust Fund would run out of money. By contrast, reports made closer to the deadline since then have pulled in the estimated date of Trust Fund exhaustion, with last year's report suggesting that 2033 will be the year that funds run out.

Indeed, the economic conditions over the past year suggest that there's little reason to expect major changes to the projections in this year's Trustees Report. Interest rates have stayed in a fairly close range, providing low returns for the Treasury bonds held in the Trust Fund. An increase in job creation might have boosted the total taxable wage base for Social Security payroll taxes, raising income for the program to some extent. Yet while those natural fluctuations can play a role in year-to-year operations, they rarely have a huge impact on projections stretching out for decades into the future.

The Key Social Security Move to Watch For

There's one key element of Social Security that lawmakers will have to address soon. Although the main fund for retirement benefits will last another couple of decades or so, the smaller source of funding for disability benefits was projected last year to run out of money in 2016. A simple way of fixing that problem is essentially to take money from the retirement side of the Trust Fund and divert it to cover disability benefits, but some lawmakers have resisted that quick fix in favor of more comprehensive reform.

Meanwhile, debate over how to change Social Security to address its future challenges continues. Some point to the need to rein in spending on the program, while others believe the program should expand by raising Social Security taxes on high-income earners.

A quick resolution to Social Security's difficulties isn't likely. Yet just like delays in the Social Security Trustees Report do nothing to stop the steady erosion of Social Security's finances, inaction from lawmakers won't keep the Trust Funds from running out of money -- with potentially catastrophic impacts for retirees in the not-so-distant future.

Motley Fool contributor Dan Caplinger hopes Social Security will be there when it's time for him to collect, but he's not holding his breath. You can follow him on Twitter @DanCaplinger or on Google Plus. Check out our free report on one great stock to buy for 2015 and beyond.
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