The threat of an America without Social Security or Medicare benefits is a very tangible prospect. In fact, the U.S. government projects it will run out of money to pay full benefits in the coming years — that is, if Congress doesn’t make necessary changes to keep Social Security trust funds secure.
Here are the go-broke dates to know about for Social Security and Medicare trust funds, plus whether Congress will be able to act in time to secure benefits for the nation’s future retirees.
Social security pushes back go-broke date by a year to 2035.
Despite experts across the board predicting an incoming recession, the Social Security Administration says post-pandemic economic recovery is happening quicker than anticipated. As a result, Social Security trustees now project they will be able to pay full benefits through 2035 — a full year longer than last year’s prediction.
Under this estimate, Americans would receive 100 percent of their benefits through 2035, after which the Social Security trust funds will run out and the government will have to pay 80 percent of the benefits.
The projected go-broke date for Medicare is even sooner.
The Medicare trust fund for inpatient hospital care is projected to deplete by 2028. This is two years later than last year’s prediction, but it’s also less than six years out. For senior citizens on Medicare, the prospect of having to pay out of pocket for hospital care is more than overwhelming. In many cases, it simply isn't manageable.
At the go-broke date, the government would cover 90 percent of these Medicare benefits rather than the full 100 percent.
What happens when we reach the go-broke dates?
Every year, the U.S. comes out with a report projecting how many years it will take for Social Security and Medicare benefits to expire. These dates fluctuate and may possibly get pushed back further in the future. Congress has the opportunity to resolve imbalances in the Social Security and Medicare trust funds that are at risk.
Social Security benefits were a sore spot for the government long before the COVID-19 pandemic. Now, a pandemic-era economy riddled with supply chain bottlenecks, unprecedented inflation, and the Russian war on Ukraine (among other global socioeconomic factors) only add to the pressure.
According to Jo Anne Jenkins, the CEO of AARP, the report sends “a clear message to Congress: despite the short-term improvement, you must act to protect the benefits people have earned and paid into both now and for the long-term.”
What can Congress do? For one, it can increase the full retirement age. In 1983, they voted to increase that age from 65 to 67. That change is still being implemented decades later.
Congress could expand social security taxation. Right now, certain taxpayers have to pay taxes on their Social Security benefits. By expanding the pool of people who pay these taxes, Congress could fill a gap in benefit inflows and outflows. Naturally, there's bound to be pushback on these options and any other choices Congress proposes, but one thing is certain. Something’s got to give if we want retiree benefits to stick around for the long haul.