In 2020 and all following years, Social Security will pay more in benefits than it takes in from taxes and interest income. Social Security will deplete its $2.9 trillion reserve fund in 2035. Medicare is pointed toward insolvency by 2026.
The figures come from the latest annual reports by the trustees for Social Security and Medicare released on Monday, April 22, 2019. The reserves will run out a little later than the trustees predicted last year. The NRLN will use the latest information from the trustees to update its "Grand Bargain" whitepaper proposal to save Social Security and Medicare for the next 75 years.
The Social Security program consists of the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. The Trustees project that the hypothetical combined Trust Funds will be depleted in 2035.
Income is sufficient to pay full scheduled benefits until 2026 for Medicare's Hospital Insurance program (Medicare Part A). The Supplementary Medical Insurance (Medicare Part B and Part D) trust fund remains adequately financed throughout the projection period, because of beneficiaries' premiums and SMI has access to general revenues.
A strong economy and low unemployment are helping fund the program in the near term. However, the outlook in the not too distant future for both programs is for smaller benefits unless Congress and the President take action instead of continuing since 1983 to kick the can down the road.
The 75-year actuarial deficit for the combined trust funds is estimated at 2.78 percent of taxable payroll, down from 2.84 percent of taxable payroll estimated in last year's report. This reflects a 0.05 percentage point worsening due to extending the projection period and valuation date one year.
The report projects that over the next 75 years, the program will have unfunded obligations of $13.9 trillion in present value, $700 billion more than the projected deficit of $13.2 trillion a year ago. The program's costs equaled 4.9% of gross domestic product in 2018, but that will rise to 5.9% by 2039, the trustees predict.
Bill Kadereit, President
National Retiree Legislative Network