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A stronger than expected economic recovery from the pandemic has pushed back the go-broke dates for Social Security and Medicare, but officials warn that the current economic turbulence is putting additional pressures on the bedrock retirement programs.
The annual Social Security and Medicare trustees report released Thursday says Social Security’s trust fund will be unable to pay full benefits in 2035, instead of last year’s estimate of 2034. The year before that it estimated an exhaustion date of 2035.
The projected depletion date for Medicare’s trust fund for inpatient hospital care moved back two years to 2028 from last year’s forecast of 2026.
“Economic recovery from the 2020 recession has been stronger and faster than assumed in last year’s reports, with positive effects on the projected actuarial status of the trust funds in these reports,” the report states.
Forecasters said in the report released Thursday that the ongoing COVID-19 pandemic will have no net effect on their long-range projections. But they also noted that assumptions for their latest report were made in February, which was before cases began climbing again nationally and inflation jumped.
Social Security pays benefits to more than 65 million Americans, mainly retirees as well as disabled people and survivors of deceased workers. Medicare covers roughly 64 million older and disabled people.
Income for Medicare’s hospital insurance fund is projected to be higher than estimates from last year because the number of covered workers who help fund it and their average wages are both expected to be higher.
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A main source of financing is payroll taxes on earnings paid by employees and employers. About 183 million people paid those taxes in 2021.
The impact of the economic recovery on the trust funds has been resoundingly positive, which was was stronger and faster than expected, a Treasury official said Thursday on the condition of anonymity during a call with reporters.
The trustees of Social Security and Medicare include the secretaries of Treasury, Health and Human Services, and Labor, as well as the Social Security commissioner. They are supposed to be joined by two “public trustees,” but those positions are currently vacant.
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