Published: Thu, June 07, 2018
Medical | By Johnnie Horton

2034 is a pivotal year for Social Security

2034 is a pivotal year for Social Security

This year, the program's cost will outstrip total income by $2 billion and non-interest income by $85 billion, the report said.

The Social Security program's costs are expected to exceed its income this year, marking the first time that has happened since 1982 and forcing the USA government to dip into the retirement system's trust fund to pay benefits to participants.

Medicare's hospital insurance fund, meanwhile, will become insolvent by 2026, or three years sooner than projected last year.

Income to the Medicare fund is expected to be lower than estimated previous year because of "lower payroll taxes attributable to lowered wages in 2017 and lower levels of projected gross domestic product", the Treasury said in a "fact sheet" accompanying the report. Asset reserves as of 2017 were $2.9 trillion. Medicare is also expected to spend more than projected a year ago, the report said. This is because premium income and general revenue income are reset each year to cover the expected rise in costs.

Each year, the trustees project the long-term finances of Medicare, which covers about 58 million Americans. At that point Social Security will be able to pay only 79% in promised benefits to retirees and disabled beneficiaries.

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"Lawmakers have a broad continuum of policy options that would close or reduce Social Security's long-term financing shortfall", the report noted.

A separate projection released on Tuesday showed it will become insolvent in 2034 - the same estimate as a year ago.

"As in past years, the trustees have determined that the fund is not adequately financed over the next 10 years", the report said, citing in part lower payroll taxes collected on lowered wages in 2017 and rising hospital spending. Taken separately, the fund for retirees is now expected to be depleted in 2034, a year earlier than last year's report, while the disability insurance reserves run out in 2032, four years later than projected last year.

Most Social Security reform proposals call for a combination of increasing payroll taxes and cutting benefits, including recommendations to raise the full retirement age or scale back on inflation protections.

"With modest legislated increases in revenue, Social Security will be able to pay all scheduled benefits for the foreseeable future", the nonprofit organization said in a background report issued in advance of the trustees' report.

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