The combined trust funds for Social Security are projected to run out in 2034, a year earlier than previously predicted, a board of trustees of the program’s accounts said in a new report released Wednesday.
The report projected that the program’s Old-Age and Survivors Insurance (OASI) fund would be able to cover “100 percent of total scheduled benefits until 2033,” while the Disability Insurance (DI) trust fund is estimated to be able to pay “100 percent of total scheduled benefits through at least 2099.”
But when the projections are combined, the resulting fund is estimated to only be able to cover “100 percent of total scheduled benefits until 2034, one year earlier than reported last year.” Once the reserves are depleted, the report estimates the total fund income would be able to pay 81 percent of scheduled benefits.
The report said the depletion dates for the funds had advanced by about three-quarters compared with the previous year’s projections.
The report cited last year’s passage of the Social Security Fairness Act as a key factor behind the shift in the funds’ projected depletion dates.
The bipartisan bill, which former President Biden signed into law in January, repealed two tax rules that proponents say have unfairly reduced benefits for many Americans who also receive government pensions.
But many experts sounded the alarm over its expected price tag and raised questions of fairness around the legislation.
The new report said on Wednesday that the repeal of the tax rules “increased projected Social Security benefit levels for some workers, relative to projected benefit levels in last year’s report,” while singling out the legislation’s impact as “the primary contributor to the change” in the combined trust fund depletion date this year.
Two other factors the board pointed to were the trustees’ extension of the “assumed period of recovery from historically low levels of fertility by 10 years” and its lowering of “the assumed long-term share of Gross Domestic Product (GDP) that accrues to workers in the form of labor compensation.”
Medicare’s hospital insurance trust fund is running out of money, and is scheduled to be depleted in 2033, three years earlier than reported last year, according to the program’s trustees.
The Hospital Insurance (HI) Trust Fund will be able to pay 100 percent of total scheduled benefits until 2033. At that point, it will only be sufficient to pay 89 percent of total scheduled benefits.
The change is due to higher-than-expected spending on hospice and inpatient care in the earlier years of the projection, the report said.
Medicare trustees have sounded the alarm on the Hospital Trust Fund for years, though the warnings have mostly been ignored by Congress, as lawmakers view Medicare reforms as a political third rail.
The trustees recommended Congress increase the standard payroll tax rate or reduce Medicare spending to address future shortfalls.
Nathaniel Weixel contributed.
Updated at 5:07 p.m. EDT
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