Go-broke dates pushed back for Social Security, Medicare
WASHINGTON — A stronger-than-expected economic recovery from the pandemic has pushed back the go-broke dates for Social Security and Medicare, but officials warn that the current economic turbulence is putting additional pressures on the bedrock retirement programs.
The annual Social Security and Medicare trustees report released last week said Social Security’s trust fund will be unable to pay full benefits beginning in 2035, instead of last year’s estimate of 2034. The year before that it estimated an exhaustion date of 2035.
The projected depletion date for Medicare’s trust fund for inpatient hospital care moved back two years to 2028 from last year’s forecast of 2026.
“Economic recovery from the 2020 recession has been stronger and faster than assumed in last year’s reports, with positive effects on the projected actuarial status of the trust funds in these reports,” the report states.
President Joe Biden said in a statement that the report “shows that the strong economic recovery driven by my economic and vaccination plans has strengthened programs that millions of Americans rely on and has put our nation in a better fiscal position.”
Forecasters said in the report that the ongoing COVID-19 pandemic will have no net effect on their long-range projections. But they also noted that assumptions for their latest report were made in February, which was before cases began climbing again nationally and inflation rose even higher.
Social Security pays benefits to more than 65 million Americans, mainly retirees
as well as disabled people and survivors of deceased workers. Medicare covers roughly 64 million older and disabled people.
When the Social Security trust fund is depleted, the government will be able to pay 80% of scheduled benefits, the report said. Medicare will be able to pay 90% of total scheduled benefits when the fund is depleted.
Income for Medicare’s hospital insurance fund is projected to be higher than estimates from last year because the number of covered workers who help fund it and their average wages are both expected to be higher.
A main source of financing is payroll taxes on earnings paid by employees and employers. About 183 million people paid those taxes in 2021.
The report projects the Medicare “Part B” premium for outpatient coverage to remain stable at $170.10 a month. But administration officials said that projection, based on information from earlier this year, doesn’t reflect an expected drop due to an overestimation of the cost of covering the Alzheimer’s treatment Aduhelm.
The trustees of Social Security and Medicare
include the secretaries of Treasury, Health and Human Services, and Labor, as well as the Social Security commissioner. They are supposed to be joined by two public trustees, however those positions have been vacant since 2015.
A representative from the White House did not respond to an email inquiry about whether the president intends to nominate new public trustees.
The trustees report is an added reminder of the U.S. government’s financial troubles, as it juggles historically high inflation, recovery from a pandemic and Russia’s war in Ukraine.
AARP CEO Jo Ann Jenkins said the reports “send a clear message to Congress: despite the short-term improvement, you must act to protect the benefits people have earned and paid into both now and for the long-term.”
“The stakes are too high for the millions of Americans who rely on Medicare and Social Security for their health and financial wellbeing,” she said.
This year, Social Security retirees got a 5.9% boost in benefits, the biggest costof-living adjustment, also known as COLA, in 39 years.