Social Security Trust Fund Depletion Date Extended to 2034


A Social Security Administration office in San Francisco.

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The Social Security trust funds that about 67 million Americans rely on for their benefits are expected to run out in 2034, a year earlier than expected last year, according to the trustees’ annual report. published by the Treasury Department Friday.

Unless Congress intervenes, at that time 80% of scheduled benefits will be payable from the combined funds of Old Age and Survivors’ Insurance and Disability Insurance.

The new exhaustion date comes as directors updated their projections for the U.S. economy to include recent data on output and inflation. Expected levels of gross domestic product and labor productivity were revised down by about 3% for the projected period, worsening the outlook for the combined Social Security funds, the report said.

In the meantime, Medicare Hospital Insurance Trust Fund will be able to pay 100% of the planned benefits until 2031, which is three years later than planned last year.

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The new estimates have prompted new calls for fixes for the programs, which Treasury Secretary Janet Yellen called “the foundational programs that older Americans rely on for their retirement security.”

“The Biden-Harris administration is committed to ensuring the long-term sustainability of these essential programs so that retirees can receive the hard-earned benefits that are owed to them,” Yellen said in a statement Friday.

The White House earlier this month made a plan to expand the solvency of the Medicare Hospital Insurance Trust Fund, also known as Medicare Part A, which covers hospital, nursing facility, and hospice services for eligible beneficiaries.

The proposal seeks to extend the hospital insurance fund for 25 years by increasing the Medicare tax rate for income over $400,000 while closing loopholes that help protect income from that tax.

However, the White House has not presented any specific proposals to address Social Security funding issues, though President Joe Biden has called for protecting and strengthening the program with his budget.

“Congress must take seriously its responsibility to protect Social Security and Medicare, developing a comprehensive plan and doing so in a way that is accountable and completely transparent to the American public,” the CEO of AARP’s Jo Ann Jenkins in a statement.

Social Security does not “go bankrupt”

In its report, Social Security administrators also released separate exhaust date projections for the program’s two funds.

The Old Age and Survivors Insurance Trust Fund, which pays benefits to retired workers, their spouses and children and survivors of deceased workers, will be able to pay full benefits until 2033, also a year earlier than last year. . At that time, 77% of benefits will be payable.

That exhaustion date is 10 years away — fewer years than expected by administrators since the reforms were implemented in 1983, noted the Peterson Foundation, a nonpartisan organization focused on raising awareness of the country’s tax challenges.

In a statement, Jason Fichtner, chief economist at the Bipartisan Policy Center, a think tank promoting bipartisanship, called the 2033 exhaustion date “particularly alarming.”

The Disability Trust Fund will be able to pay full benefits until at least 2097, the last year of the reporting projection period.

Yet experts also pointed out that there were signs of strength for the program, which had $2.83 trillion in combined trust fund reserves at the end of 2022.

“Social Security is not going bankrupt; the program will still be able to pay benefits thanks to continued contributions from workers and employers,” said Max Richtman, president and CEO of the National Committee for preservation of social security and health insurance.

Insolvency dates have remained roughly the same despite the onset of the Covid-19 pandemic and economic upheaval, he noted.

To shore up funds, legislators can usually choose between raising taxes, cutting benefits, or a combination of both.

“Congress should act immediately to restore a sense of confidence, both in the government and in the program,” said Nancy Altman, president of Social Security Works, an organization that advocates for the expansion of the program through benefits. more generous and higher taxes.

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