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 benefits are scheduled to be depleted in 2034, one year earlier than was projected last year, according to the annual trustees’ report released by the Treasury Department on Friday.
Unless Congress takes action, at that time, 80% of scheduled benefits will be payable from the combined funds for old age and survivors insurance and disability insurance.
The new depletion date comes as the trustees updated their projections for the U.S. economy to include recent output and inflation. The expected levels of gross domestic product and labor productivity were revised down by about 3% for the projected time period, which worsened the outlook for Social Security’s combined funds, according to the report.
Meanwhile, Medicare’s hospital insurance trust fund will be able to pay 100% of scheduled benefits until 2031, three years later than projected last year.
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The new estimates prompted renewed calls for fixes to the programs, which Treasury Secretary Janet Yellen referred to as “bedrock programs that older Americans rely upon for their retirement security.”
“The Biden-Harris Administration is committed to ensuring the long-term viability of these critical programs so that retirees can receive the hard-earned benefits they’re owed,” Yellen said in a statement Friday.
The White House earlier this month laid out a plan to extend the solvency of Medicare’s hospital insurance trust fund, also known as Medicare Part A, which covers hospital, nursing facility and hospice services for eligible beneficiaries.
The proposal aims to extend the hospital insurance fund for 25 years by increasing the Medicare tax rate for incomes over $400,000 while closing loopholes that enable income to be shielded from that tax.
However, the White House has not put forth any specific proposal for resolving Social Security’s funding woes, though President Joe Biden has called for protecting and strengthening the program with his budget.
“Congress must take its responsibility to protect Social Security and Medicare seriously, by developing a comprehensive plan and doing so in a way that is accountable and fully transparent to the American public,” AARP CEO Jo Ann Jenkins said in a statement Friday.
This is a developing story. Please check back for updates.