CHICAGO (Reuters) - If you worry about the future of Social Security and Medicare, this is the week to get answers to your questions. The most authoritative annual reports on the long-term health of both programs were issued on Monday, and while the news was mixed, there are reasons to be encouraged about our two most important retirement programs.
Under the Social Security Act, a board of trustees
reports annually to Congress on the status and long-term financial
prospects of Social Security and Medicare. The reports are prepared by
the professional actuaries who have made careers out of managing the
numbers and are signed by three cabinet secretaries, the commissioner of
Social Security and two publicly appointed trustees - one Republican,
Here are my five key takeaways from this year’s final word on our social insurance programs.
Imminent collapse nowhere in sight. Social Security and Medicare face
long-term financial problems, but there’s no cause for panic about
Social Security’s retirement program is fully
funded for the next 19 years. It has $2.8 trillion in reserves, and that
figure will rise to $2.9 trillion in 2019, when the surplus funds will
begin depleting rapidly as baby boomer retirements accelerate. Although
you’ll often hear that Social Security spends more annually than it
receives in taxes, the program actually took in $32 billion more than it
spent last year, when interest on bond holdings and taxation of
benefits are included.
The retirement trust fund will be depleted
in 2034, at which point current revenue would be sufficient to pay only
77 percent of benefits - unless Congress enacts reforms to put the
program back into long-term balance.
financial outlook improved a bit compared with last year’s report
because of continued low healthcare inflation. The program’s Hospital
Insurance trust fund - which finances Medicare Part A - is projected to
run dry in 2030, four years later than last year’s forecast and 13 years
later than forecast before passage of the Affordable Care Act (ACA).
2030, the hospital fund would have enough resources to cover just 85
percent of its expenditures. (Medicare’s other parts - outpatient and
prescription drug services - are funded through beneficiary premiums and
general revenue, so they don’t have trust funds at risk of running