Social Security has 16 years left before benefit cuts begin, report says

Social Security now running a deficit; Medicare to hit insolvency three years earlier than projected

Social Security now running a deficit; Medicare to hit insolvency three years earlier than projected

Medicare and Social Security are running out of money more quickly than expected, officials said Tuesday.

The total costs of Social Security will exceed total income this year for the first time since 1982, according to the annual Social Security and Medicare trustees report released on Tuesday, as funds for Medicare are expected to run dry earlier than expected.

Don't worry, that doesn't mean that Mom and Dad won't have any Social Security to rely on after 2034.

President Donald Trump campaigned on a promise that he wouldn't cut Social Security or Medicare, but he hasn't offered a rescue plan for either program. But, hey, they only need three-quarters of their food, home, and medical coverage, right?

That represents a change from last year, with the exhaustion date for disability insurance extended four years later than projected last year and the depletion for the retirement program estimated to occur one year earlier than previously projected.

A new report is heightening concerns about the financial future of Medicare.

"The Part B and Part D accounts in the [Supplementary Medical Insurance] trust fund are expected to be adequately financed because premium income and general revenue income are reset each year to cover expected costs", the report stated.

Social Security recipients are likely to see a cost of living increase of about 2.4 percent next year, working out to roughly $31 a month, government experts said. But when the money is actually needed to pay for benefits, economists say a government deep in debt could be hard pressed to make good. General revenues will finance roughly three-quarters of SMI costs, and premiums paid by beneficiaries nearly all of the remaining quarter.

Both the cost-of-living increase and the Medicare outpatient premium are not officially determined until later in the year, and the initial projections can change.

Sixty-two million people, including 45 million retired workers, were receiving OASDI benefits at the end of 2017.

"The programs remain secure", Treasury Secretary Steven Mnuchin said in a statement. However, certain long-term issues persist. That estimate is used as a benchmark, even though under the law the separate trust funds would be exhausted independently of each other.

In another calculation, the trustees estimated the 75-year actuarial deficit for the combined trust funds at 2.84 percent of taxable payroll, up slightly from the 2.83 percent of taxable payroll estimated in last year's report.

Medicare spending as a percentage of gross domestic product totaled 3.7 percent in 2017, and the trustees project it will increase to at least 6.2 percent by 2092.