Good news for Social Security

(Bloomberg) — The Social Security system’s retiree fund will be able to fully pay scheduled benefits until 2034, bolstered by higher-than-expected tax receipts stemming from a strong US economic recovery, according to the Treasury Department.

That gives the key fund an extra year compared with forecasts made last year, the Treasury said in a report Thursday.

“The recovery of employment, earnings, and GDP from the 2020 recession has been faster and stronger than projected in last year’s report,” according to the 2022 annual report from trustees of the Social Security and Medicare trust funds. That’s resulted in “higher payroll tax receipts and higher revenue from income taxation of Social Security benefits,” the report said.

Officials estimated Social Security’s fund for disability benefits will be able to pay benefits in full through the 75-year projection period. Last year’s report estimated the fund would run short in 2058.

The disability fund estimates reflected a continuing decline in the rate of disabilities among Americans, which peaked in 2010.

Medicare warning

For the sixth straight year, the trustees are issuing a “Medicare funding warning” as required by law when annual tax and premium revenues of the combined Medicare funds “will be below 55% of projected combined annual outlays within the next seven fiscal years,” the report said.

Under current law and the Trustees’ projections, these “warnings will recur every year through the 75-year projection period,” the report added.

Medicare’s hospital insurance trust fund, which helps pay for “Part A” inpatient hospital care, will be able to pay full benefits until 2028, two years later than last year’s projection.

“At that time, the fund’s reserves will become depleted and continuing total program income will be sufficient to pay 90% of total scheduled benefits,” the report warned.

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