COVID recession pushed Social Security insolvency up a year, left Medicare unchanged

The sharp shock of the coronavirus recession pushed Social Security a year closer to insolvency but left Medicare’s exhaustion date unchanged, the government reported Tuesday in a counterintuitive assessment that deepens the uncertainty around the nation’s bedrock retirement programs.

The new projections in the annual Social Security and Medicare trustees reports indicate that Social Security’s massive trust fund will be unable to pay full benefits in 2034 instead of last year’s estimated exhaustion date of 2035. For the first time in 39 years the cost of delivering benefits will exceed the program’s total income from payroll tax collections and interest during this year. From here on, Social Security will be tapping its savings to pay full benefits.

The depletion date for Medicare’s trust fund for inpatient care remained unchanged from last year, estimated in 2026.

In the 1980s, financial warnings about Social Security prompted then-President Ronald Reagan and lawmakers of both parties in Congress to collaborate on a long-term solvency plan, but such action is unlikely in today’s bitter political climate. Democrats who control the White House and Congress offered assurances they would protect both programs.