Social Security, Medicare funds will last until 2035, but Congress 'needs to act': Report
Due to low unemployment and rising wages, Medicare's trust fund for hospital expenses will see its reserves depleted in 2036, and Social Security's funds will pay full benefits until 2035, according to a new report.
The Social Security trust fund got a slight reprieve this week when trustees announced that benefits may not have to be reduced until 2035, which is one year later than previously forecast.
“This year’s report is a measure of good news for the millions of Americans who depend on Social Security, including the roughly 50% of seniors for whom Social Security is the difference between poverty and living in dignity,” Commissioner Martin O’Malley said. “Any potential benefit reduction event has been pushed off from 2034 to 2035.”
O’Malley credited the nation’s economic performance for the potential delay in cuts.
“More people are contributing to Social Security, thanks to strong economic policies that have yielded impressive wage growth, historic job creation and a steady, low unemployment rate,” he said. “So long as Americans across our country continue to work, Social Security can – and will – continue to pay benefits.”
If the trust fund is depleted, benefits won’t suddenly disappear. Instead, Social Security beneficiaries will face a cut to their monthly checks, with the agency projecting that recipients would lose 17% of their current benefits. This represents an improvement from last year, when it was estimated that benefits would be cut by 23%.
O’Malley urged lawmakers to shore up the fund to prevent such a reduction in benefits.
“Congress can and should take action to extend the financial health of the trust fund into the foreseeable future, just as it did in the past on a bipartisan basis,” he said. “Eliminating the shortfall will bring peace of mind to Social Security’s 70 million-plus beneficiaries, the 180 million workers and their families who contribute to Social Security and the entire nation.”
Meanwhile, the go-broke date for Medicare was pushed back by five years to 2036, due in part to higher payroll tax income and lower-than-projected expenses. After the fund’s reserves are depleted, Medicare would be able to cover only 89% of costs for patients’ hospital visits, hospice care and nursing home stays or home health care that follow hospital visits.
Republicans and Democrats differ on how to reform entitlement programs, and Medicare and Social Security are expected to be hot-button issues in an election year.
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“Since I took office, my economic plan and strong recovery from the pandemic have helped extend Medicare solvency by a decade, with today’s report showing a full five years of additional solvency,” President Joe Biden said. “I am committed to extending Social Security solvency by asking the highest-income Americans to pay their fair share without cutting benefits or privatizing Social Security.”