The Social Security Administration’s (SSA) Office of the Chief Actuary recently released its annual report on the status of the trust funds. There is some good news, but the long-term outlook is bleak.

Social Security Update:

• Slightly Better Insolvency: The combined Social Security trust funds are now projected to run out in 2035, one year later than last year’s estimates. Woo-hoo! The program has a little more time to collect taxes before we have to fiddle with it.

• Delays Leave Shortfall in Play: Social Security might still find itself in a vacuum in 2035 when it can pay only 83 percent of scheduled benefits in the absence of reform, even if the delay kicks in.

• Economic Factors: An improving economy with lower unemployment and higher pay are included in the items that contribute to the bottom line.

Expert Opinions:

• The impetus for Reform: Despite the delay, experts encourage Congress to look into Social Security’s solvency sooner rather than later, as it will become more vital to find solutions.

• Potential Solutions: Possible solutions include tax increases, benefit adjustments, or a combination of both.

Medicare Update:

• Extended Solvency: The Medicare Hospital Insurance trust fund – supposedly good until 65, the age at which you qualify for Medicare – is projected to last until 2036, five years later than it did last year.

• Reason for Improvement: Higher payroll tax income and lower-than-projected spending contributed to this improvement.

The Road Ahead:

• Bipartisan Solution Requested: Lawmakers should work together on a bipartisan basis to find a solution for the long-term solvency of Social Security and Medicare.

• A common timing of peak depletion might create an opportunity to restructure reforms Unified Reform Opportunity.

• Belt-tightening Ahead: With these entitlements, there will likely be some tough choices to make: perhaps increasing taxes or adjusting benefits to allow for these programs to survive.

Key Takeaways:

• The numbers by which Social Security and Medicare were projected to run out have both been delayed by a few years.

• However, the long-term solvency of both programs remains a major concern.

Congress must act now to avoid advocating practices that could harm future generations by undermining the sustainability of these important programs.

Top10