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Social Security trust funds will become unable to pay full benefits from 2034, a year earlier than forecast last year, according to its forecast on Tuesday, as the COVID-19 pandemic forces finances to reassess of the giant federal program.
The U.S. government has also said Medicare’s hospital insurance fund will be depleted by 2026, or around the same time as planned in 2020. It released annual directors’ reports on both programs on Tuesday.
“The pandemic and its economic impact have had an effect on social security trust funds, and the future course of the pandemic is still uncertain,” said Acting Social Security Administration Commissioner Kilolo Kijakazi , in a press release.
“Yet social security will continue to play a vital role in the lives of 65 million beneficiaries and 176 million workers and their families in 2021.”
Social Security has two programs, one for retirees and another that provides disability benefits.
The government said the old age and survivors’ insurance trust fund would become unable to pay full benefits from 2033, a year earlier than expected last year, while the disability insurance trust fund would run out in 2057, 8 years earlier. According to the government, the hypothetical combined AVS and AI funds would become unable to pay the planned benefits in a timely manner in 2034, a year earlier.
Senior administration officials told reporters that the US economic recession caused by COVID has led to a decline in employment and therefore a decrease in payroll tax receipts, accelerating the depletion of Social Security reserves. .
They also said their latest projections took into account other effects of COVID and the recession, such as rising death rates, falling birth rates and lower immigration.
Annual reports have called for adjustments for years, but lawmakers in Washington are opposed to cutting benefits or raising taxes.
Opinion: If Social Security falls into crisis, voters will have no one to blame
The latest status updates for the two largest government benefit programs come after years of discussion of a retirement crisis in the United States, sparked by people saving too little for their twilight years even as retirement periods increase thanks to the increase in life expectancy.
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