Two of America’s most vital social safety net programs—Social Security and Medicare—are now projected to run out of full funding earlier than previously expected, according to a report released Wednesday by the programs’ trustees.
The annual report, issued by the Social Security and Medicare Boards of Trustees, revealed that both trust funds are approaching insolvency faster than forecasted just a year ago. The updated projections warn that unless legislative action is taken, millions of Americans could see reduced benefits within the next decade.
The new forecast shifts the expected insolvency date for Social Security’s trust funds to 2034, one year earlier than last year’s estimate of 2035. This fund supports monthly benefits for over 60 million retirees, survivors, and individuals with disabilities.
Medicare’s hospital insurance trust fund—which finances Medicare Part A, covering inpatient hospital care, skilled nursing facilities, and hospice services—is now projected to become insolvent in 2033, three years sooner than the previous forecast of 2036. Medicare currently serves more than 68 million Americans, most of whom are over the age of 65.
The trustees attribute the faster depletion of Social Security funds in part to the enactment of the Social Security Fairness Act, which took effect in January. The law repealed the Windfall Elimination Provision and Government Pension Offset rules, increasing projected benefit payouts for some public sector workers. This change significantly raised the program’s future financial obligations.
For Medicare, the report cites unexpectedly high expenditures in the hospital insurance fund last year as a key factor in the revised timeline.
Though the trust funds are projected to be depleted within a decade, that does not mean benefits will disappear altogether. After 2034, Social Security is expected to be able to pay approximately 81% of scheduled benefits using incoming payroll taxes. Similarly, after 2033, Medicare’s Part A trust fund is expected to cover around 89% of its obligations.
Still, the trustees’ warning serves as a call to action for lawmakers. Without reforms—such as raising taxes, reducing benefits, or altering eligibility—millions of older Americans could face financial uncertainty in the years ahead.
The report is likely to fuel ongoing debates in Washington over entitlement reform, as policymakers weigh how to ensure the long-term stability of two of the most relied-upon programs in the country.