(CNSNews.com) - Social Security faces an unfunded liability of $8.6 trillion, according to the 2012 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds.
The unfunded liability is the amount that has been promised in benefits to people now alive that will not be funded by the tax revenue the system is expected to take in to pay for those benefits. (The Social Security trustees calculate the unfunded liability for a period of 75 years into the future, from 2012 to 2086)
The $8.6 trillion in unfunded benefits Social Security is expected to pay over the next 75 years equals $73,167.83 for each of the 117,538,000 households the Census Bureau said were in the United States in 2010.
However, the report also shows that when considering the unfunded obligations over an “infinite horizon”—the period extending into the indefinite future—the $8.6 trillion shortfall balloons to $20.5 trillion.
“Extending the horizon beyond 75 years increases the measured unfunded obligation,” the report said.
“Through the infinite horizon, the unfunded obligation, or shortfall, equals $20.5 trillion in present value, which represents 3.9 percent of future taxable payroll or 1.3 percent of future GDP,” reads the report.
The report adds that the 2012 estimate for unfunded obligations over the infinite horizon has increased from the $17.9 trillion in the 2011 report.