Social Security, one of the key safety nets in America, is expected to run out a year sooner than projected.
Annual reports released by the Treasury Department on Monday revealed that the Social Security’s reserve funds, if combined, would run out of money to pay beneficiaries by 2034. In addition, the trust fund that pays Medicare’s hospital bills is expected to deplete by 2033, three years earlier than initially anticipated, Politico reported.
The change in America’s safety net and reserves was driven primarily by a bipartisan expansion of benefits to millions of people, a majority of whom worked in the public sector under President Joe Biden. The other issues are that fertility rates are remaining lower for longer, and economic projections show slow long-term wage growth.
For Medicare, finances have worsened due to higher-than-anticipated expenditures, along with increased expectations for future spending on hospital and hospice care.
“This data underscores the need for lawmakers to take action to support the long-term viability of these programs,” said Treasury Secretary Scott Bessent, who serves as the managing trustee of the funds.
What’s concerning is that all this is happening amid the Trump administration’s priority of slashing both the federal workforce and budget.
What’s At Stake For Social Security
Meanwhile, as Politico points out, Trump promised on the campaign trail to eliminate taxes on Social Security benefits. Congressional Republicans, however, have not introduced a policy bill to implement the cuts Trump promised. House Republicans are floating around giving senior citizens an extra $4,000 in tax deductions. Senate Republicans are proposing a $6,000 deduction.
An estimated 68 million people received monthly Social Security benefits in 2024. Meanwhile, Medicare provided health insurance coverage to about 67.6 million people.
Unfortunately, the Social Security and Medicare programs pay out more in benefits than the government collects in payroll taxes that fund the programs.
If Congress fails to act, the program will only have enough money to pay about 81% of the scheduled Social Security benefits. For Medicare, the program would only be able to pay 89% of benefits.
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