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Social Security trust fund reserves on track to be depleted by 2034

Social Security trust fund reserves on track to be depleted by 2034

On Tuesday, Social Security and Medicare Board of Trustees released their 2018 Annual Report which estimated significant shortfalls in Medicare as early as 2026 - three years earlier than last projected - and that the Social Security Trust Fund will be depleted by 2034, the same year as previously reported, but concerning all the same.

The trust fund for Medicare is set to become insolvent in 2026 - three years earlier than last year's official projection.

The trustees forecast that 100% of benefits will be covered through 2034, after which the trust funds for Social Security, which also cover old age and disability insurance programs, will only be able to cover about 79% of benefits.

The projections are the first from the administration since Trump signed a $1.5 trillion tax cut into law in December. In a 2006 blog post entitled "Sometimes, Governments Lie", the CATO Institute's Michael Cannon observed that both Social Security and Medicare have always been one big unfunded liability.

More than 60 million Americans benefit from both programs, which provide a guaranteed income and healthcare for many retirees and the disabled.

In principle, the U.S.is supposed to be paying forward its Social Security and Medicare obligations by building up trust funds to cover future costs.

A new report is heightening concerns about the financial future of Medicare.

The Congressional Budget Office said in April that federal deficits and debt would soar in the coming decade, after passage of the tax overhaul and legislation to increase military and domestic spending.

Challenges for both programs are exacerbated by the aging of the baby boomer population, without an equivalent proportion of workers available to replace them in the workforce. And the number of people on Social Security is expected to climb to 91 million, from 62 million, in the same period.

"Our estimate could change, because we still have several months of CPI data to go before the COLA is announced in October", Mary Johnson, The Senior Citizens League's Social Security policy analyst, said in a statement.

Cubanski also said that Americans with higher incomes and more lucrative Social Security benefits will benefit from federal tax cuts that will lower paycheck deductions.

Medicare costs will rise from last year's 3.7 percent of GDP to 5.8 percent by 2038.

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