Social Security and Medicare Are Only 8 Years from Insolvency

The Trustees for Social Security and Medicare released their annual reports on the financial status of the programs’ respective trust funds today. The Trustees project that the Social Security Old-Age and Survivors Insurance (OASI) trust fund and the Medicare Hospital Insurance (HI) trust fund will both run out of reserves in 2033, and the theoretically combined Social Security Old-Age, Survivors, and Disability Insurance trust fund will run out in 2034.

Upon insolvency of the retirement program, beneficiaries face a 23 percent across-the-board benefit cut. Medicare payments, meanwhile, would be cut by 11 percent. Both cuts would grow over time.

Over 75 years, the Trustees project the Social Security trust funds face an 3.82 percent of taxable payroll shortfall, up significantly from 3.50 percent last year – largely due to the enactment of the Social Security Fairness Act. Medicare HI faces a 75-year shortfall of 0.42 percent of payroll.

Read our preliminary analysis of the reports here. And register for our event “Checking in on the Social Security & Medicare Trust Funds” on Tuesday, June 24 at 1:30 pm EDT here. A full analysis of each report is forthcoming.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget: 

Seventy million people rely on Social Security and Medicare, and yet our leaders continue to let these programs hurtle toward insolvency. And it’s not just the negligence of letting another year pass – Washington is actively making things worse.  

In just eight short years, retirees will face steep cuts to their Social Security and Medicare benefits. Under the law, their Social Security checks will be reduced by 23 percent, while access to health care will be limited due to an 11 percent cut to Medicare payments.

Yet Congress seems more intent on cutting taxes and scoring political points than rescuing these programs from the brink.  

Social Security and Medicare won’t even be able to pay full benefits to current retirees – they will be insolvent when today’s 59 year olds reach the full retirement age and today’s youngest retirees turn 70. Where is the sense of urgency?

It’s time to start telling the truth when it comes to Social Security and Medicare. We are running out of time to phase in changes gradually and avoid harsh cuts, sharp tax increases, or unacceptable borrowing. Demagoguing this issue may be politically expedient, but it will ultimately prove ruinous for the tens of millions of Americans that rely on the programs.