Social Security has 16 years left before benefit cuts begin, report says

Social Security now running a deficit; Medicare to hit insolvency three years earlier than projected

Social Security now running a deficit; Medicare to hit insolvency three years earlier than projected

Medicare and Social Security are running out of money more quickly than expected, officials said Tuesday.

Social Security this year will spend more than it takes in, the program's trustees said in a new report Tuesday that signals the official beginning of the program's slide into insolvency.

Government trustees reported that a combination of rising costs and an aging population cut the life expectancy of Medicare's trust fund to just 8 years. As for Social Security, proposed reform includes slowing the program's growth by determining benefits based on prices rather than wages and making significant cuts to the Social Security Disability Insurance and Supplemental Security Income program, which is plagued with fraud.

The report says the other trust fund, which covers Medicare Parts B and D, is expected to be financed through the next 10 years and beyond. The program's reserves are expected to be depleted in 2034, according to the trustees report, the same projection as previous year.

Still, tax collections would be sufficient to pay about three-fourths of promised benefits for a half-century.

US Treasury Secretary Steven Mnuchin, who also serves as a trustee for both programs, admitted there were "long-term issues", but dismissed concerns about the programs' future solvency.

Despite the word "depletion", the trust fund will still be able to pay beneficiaries about three-quarters of their scheduled benefits after 2034.

However, as now projected, it is highly unlikely that economic growth absent larger reforms could solve the programs' huge budget quagmire.

Both the cost-of-living increase and the Medicare outpatient premium are not officially determined until later in the year, and the initial projections can change. During the same period, about 62 million people received benefits, including retired and disabled workers, their eligible family members and survivors of deceased workers. Social Security and Medicare account for 42% of all federal spending. But when interest income is excluded from the equation, program costs exceed income throughout the 75-year projection period.

Social Security paid more than $941 billion in benefits past year.

President Donald Trump says he won't cut Social Security or Medicare, but hasn't offered a rescue plan for the long run.

Medicare spending as a percentage of gross domestic product totaled 3.7 percent in 2017, and the trustees project it will increase to at least 6.2 percent by 2092.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.