A recent study out of Harvard and Dartmouth found that Social Security bankruptcy is closer than projected due to an overconfident “systematic bias” in Social Security Administration projection models.
The SSA’s own projections find that the trust fund that pays Social Security benefits is projected to run dry by 2033 if no changes are made. But the recent study questions this, claiming that Social Security’s own projections have suffered from systematic bias that favors overstating their trust fund’s strength, underestimating future life expectancy of beneficiaries, and not critically examining their findings.
The report stated, “After 2000, forecast errors became increasingly biased, and in the same direction. Trustees Reports after 2000 all overestimated the assets in the program and overestimated solvency of the Trust Funds.” In the first 10 years after 2000, the Social Security Administration’s revenue was overestimated and costs underestimated to the tune of almost US$1 trillion.
The study’s assertion of an overconfident bias in projecting Social Security bankruptcy is seen in the record of the SSA’s own reports in which the expected bankruptcy year has been adjusted closer and closer during the past decade. In 2004, the SSA estimated a bankruptcy date of 2042. In 2009, the estimate was again adjusted to 2037, and in 2012 to 2033.
In an earlier report from 2012, Gary King, one of the authors of the study and director of Harvard’s Institute for Quantitative Social Science, along with his co-author, Samir Soneji, found that Social Security bankruptcy would take place in 2031.