Social Security and Medicare Are Approaching Insolvency
The Social Security and Medicare Trustees released their annual reports on the state of the trust funds today. The Trustees find that Medicare’s Hospital Insurance trust fund will be insolvent by 2028, Social Security’s Old-Age and Survivors Insurance trust fund will run out of reserves by 2034, and the theoretically combined Social Security trust funds will be insolvent by 2035. Upon insolvency, Social Security benefits will be reduced across-the-board by 20 percent under current law while Medicare Hospital Insurance payments will be reduced by 10 percent.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
Social Security is only 13 years from insolvency and Medicare is only 6 years. Policymakers need to get their heads out of the sand and stop pretending these vital programs’ funding issues will fix themselves.
Today’s youngest retirees will be 68 years old when Medicare runs out of reserves and 75 years old when Social Security becomes insolvent. Workers under the age of 55 will retire into an insolvent system. At the time of Social Security insolvency, all beneficiaries will face a 20 percent cut in their benefits if we do nothing.
Social Security’s 3.4 percent of payroll shortfall is a slight improvement from last year but would still require the equivalent of a 20 percent benefit reduction or a 26 percent tax increase to close. If we wait until 2035, benefits would need to be cut by a quarter or taxes raised by a third, and we wouldn’t be able to give workers and retirees time to adjust to this new reality.
Combined with last week’s projections from CBO, we have a bleak fiscal future ahead of us. It doesn’t have to be this way – we can start enacting thoughtful reforms that increase revenue, reduce spending, lower health care costs, stamp out today’s rampant inflation, help grow the economy, and secure our trust funds. But first policymakers need to open their eyes to the challenges we face.
The looming insolvency of Social Security and Medicare are problems we’ve known about for decades. It’s long past time to enact trust fund solutions that put these programs and our national debt on a more sustainable path.
Read our preliminary analysis here: Trustees: Social Security and Medicare Headed for Insolvency in 13 and 6 Years
Virtual Event: What's New in the 2022 Social Security and Medicare Trustees Reports?
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For more information, please contact Kim McIntyre, Director of Media Relations, at mcintyre@crfb.org
