The U.S. Treasury‘s trustees’ reports revealed a slight improvement in the trust funds supporting Social Security and Medicare benefits for seniors.
Projections now suggest that the Medicare Hospital Insurance Trust Fund will last until 2036, five years longer than previously forecasted. After this point, it would only be able to cover 89% of scheduled benefits.
The combined Social Security trust funds are now projected to be depleted in 2035, extending one year from last year’s report.
Post-depletion, only 83% of scheduled pension and disability benefits could be covered. Despite these extensions, long-term solvency concerns persist.
With the retirement of the Baby Boom generation, Congress faces the pressing need to address these challenges. Potential solutions may involve raising revenues, reducing costs, or adjusting benefits.
The Biden administration has rejected benefit cuts and has proposed raising payroll taxes on Americans earning over $400,000.
The reports attribute the improvements to stronger-than-expected economic growth and productivity, which have boosted tax revenues. The trustees revised their estimates of labor productivity upwards.
The Social Security Old Age and Survivors Trust Fund would see its reserve depletion date delayed by approximately seven months to November 2033, based on increased economic growth and payroll tax collections.
The Social Security Disability Trust Fund is now projected to be able to pay 100% of its scheduled benefits through at least 2098, marking a notable shift from previous projections.
The Medicare Hospital Insurance Trust Fund also benefits from reductions in healthcare costs and policy changes. While surpluses are projected through 2029, deficits are expected to deplete the trust fund’s reserves by 2036.
