Committee for a Responsible Federal Budget:
The Social Security and Medicare Trustees released their annual reports, today, highlighting the precarious financial states of the programs. The Trustees project that both the Social Security retirement trust fund and the Medicare Hospital Insurance (HI) trust fund are just 8 years from insolvency, and will require timely trust fund solutions.
Full analyses of the reports will be published soon. In this short analysis, we show the Trustees project that:
- Social Security’s Old Age and Survivors Insurance (OASI) trust fund will be insolvent in 2033, or 2034 if funds are reallocated from the disability (SSDI) trust fund.
- Medicare’s Hospital Insurance (HI) trust fund will deplete its reserves by 2033.
- Over the next 75 years, Social Security faces a shortfall of 3.82 percent of taxable payroll, while the HI trust fund faces a shortfall of 0.42 percent of payroll.
- Total Medicare costs are projected to rise from 3.8 percent of GDP in 2024 to 6.7 percent by 2099, or 8.8 percent under the Chief Actuary’s alternative scenario.
The looming insolvency of Social Security’s retirement program will lead to a 23 percent across-the-board benefit cut when today’s 59-year-olds reach the Full Retirement Age and when today’s youngest retirees turn 70. On a theoretically combined basis, beneficiaries will face a 19 percent benefit cut just one year later.