Social Security and Medicare: A Look at the Latest Report


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.