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Social Security must reduce benefits in 2034 if reforms aren’t made
06 June 2018, 10:43 | Randall Craig
Health and Human Services Secretary Alex Azar is one of the trustees overseeing Medicare
Medicare's Board of Trustees blamed the earlier depletion forecast on lower payroll taxes in 2017 as a result of lower wages, less revenue from taxing Social Security benefits and higher-than-expected spending previous year.
Indeed, the trustees of Social Security and Medicare forecast the program's reserves will be depleted by 2034, at which point it won't be able to pay full benefits on a timely basis. In reality, it has been running annual deficits since 2010, and the insolvency date has moved up eight years.As the Social Security crisis keeps getting closer, the political parties are moving further away from doing anything about it.What's scary is that Social Security is relatively easy to fix when compared to Medicare, a program where the rising retirement population is interacting with growing healthcare costs.
Because Social Security is a main source of income for older Americans, that scenario could crimp household budgets for seniors and even push some into poverty.
The DI trust fund, on the other hand, is projected to be exhausted in 2032, extended from last year's estimate of 2028. That is three years earlier than projected last year, Marketwatch noted.
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.
"The administration's economic agenda - tax cuts, regulatory reform, and improved trade agreements - will generate the long-term growth needed to help secure these programs and lead them to a more stable path", Mnuchin said in a statement on Tuesday. And the trustees now say that program is going to be insolvent in 2026 - or roughly the same time as we are from the passage of Obamacare.
President 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. Options include raising the maximum income cutoff for imposing Social Security taxes, now $127,200.
"The current trajectories in health spending are both unsustainable and unmatched by increases in quality", Alex M. Azar II, the secretary of health and human services and a trustee of Medicare and Social Security, said on Tuesday.
Medicare Part A's trust fund is funded through payroll taxes, split between employer and employee.
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