Social Security will not be able to fully pay monthly benefits to tens of millions of retirees and people with disabilities in 2034 if lawmakers don’t act to address the program’s pending shortfall, according to an annual report released Wednesday by Social Security’s trustees.
The combined Social Security trust funds – which help support payments to the elderly, survivors and people with disabilities – are expected to be exhausted in 2034, one year earlier thanpreviously forecast, according to the trustees’ annual report. At that time, payroll tax revenue and other income sources will only be able to cover 81% of benefits owed.
The deterioration in the forecast stems from several factors, includinga lawpassed by Congress last year that increased benefits for certain workers and the trustees’ assumption that it will take longer for the nation’s fertility rate to recover from historically low levels. Average earnings are expected to grow somewhat more slowly over the coming decade, according to the report.
Medicare’s fiscal outlook also worsened. Its hospital insurance trust fund, known as Medicare Part A, is expected to be able to cover scheduled inpatient hospital benefits until 2033, compared to 2036 in last year’s report from the program’s trustees. At that time, Medicare will only be able to pay 89% of total scheduled Part A benefits, which also cover hospice care, short-term skilled nursing facility services and home health services following hospitalizations.
The program’s trustees project that Medicare’s trust fund will be drained sooner because of increased medical spending in 2024, which also raised the forecast for future expenditures. Plus, the trustees raised their assumed growth level of inpatient and hospice services in coming years.