The annual trustees’ report released by the Social Security Administration indicates that the trust funds relied upon to pay benefits are now projected to run out in 2035, one year later than previously projected. On the projected depletion date, 83% of benefits will still be payable if Congress does not take action sooner to prevent the shortfall. The Trustees credited the slightly improved outlook to more people contributing to the program due to a strong economy, low unemployment, and higher job and wage growth. Last year, the program’s funds were projected to last through 2034, with 80% of benefits being payable.
Social Security Commissioner Martin O’Malley emphasized the importance of extending the trust fund’s solvency through bipartisan action in order to bring peace of mind to the millions of beneficiaries, workers, and families who rely on the program. The new projected depletion date of 2035 for Social Security applies to the combined trust funds used to pay benefits when more funds are needed beyond payroll taxes. High earners may have an additional 0.9% withheld for Medicare, while the Disability Insurance Trust Fund is projected to be able to pay full benefits until at least 2098.
The annual trustees’ report also provided updates on Medicare, with the Medicare Hospital Insurance trust fund seeing a five-year improvement in its depletion date to 2036. Experts caution that while the new projected depletion dates offer some wiggle room, the solvency of both Social Security and Medicare should be addressed sooner rather than later. AARP members over the age of 50 are particularly concerned, given that 40% of families over the age of 65 rely on Social Security for at least half of their income.
Experts suggest that prospective changes may include tax increases, benefit cuts, or a combination of both to make the trust funds whole for the future. The status of Social Security’s trust funds has worsened since the last major reforms were enacted in 1983, with senior Treasury officials highlighting the need to address inequities and solvency issues. Democrats have proposed tax increases on wealthier individuals and making benefits more generous, while Republicans have advocated for bipartisan commissions to address the challenges facing the programs.
Despite the annual updates on the status of Social Security and Medicare, Congress has yet to act on addressing the projected depletion dates of the trust funds. Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, expressed concerns about the lack of action and warned that the country is approaching a deadline without implementing solutions. It is crucial for lawmakers to come together in a bipartisan manner to address the challenges facing Social Security and Medicare to ensure the long-term solvency and sustainability of these vital programs.
