In the latest Social Security and Medicare trustees report released Monday, the financial future of Medicare and Social Security appears slightly brighter due to an improving economy. However, officials caution that without legislative action, these programs may not be able to fully support retiring Americans in the future.
The report has delayed the projected depletion dates for both programs. Medicare’s hospital insurance trust fund now has until 2036, extended by five years, before it can no longer cover full expenses. This extension is attributed to increased payroll tax revenues and expenses falling below last year’s projections. Should the fund deplete, it would only be capable of covering 89% of costs related to hospital visits and other associated health services.
Social Security’s trust funds, supporting old age and disability benefits, are now expected to run out in 2035, a one-year improvement from prior estimates. At that point, the program would only manage to pay out 83% of its promised benefits.
This comes amidst political promises to protect these programs. President Joe Biden has pledged to strengthen Social Security and Medicare, suggesting that wealthier Americans should contribute more to ensure their sustainability. Meanwhile, discussions and debates over the programs’ futures are heating up as both Biden and former President Donald Trump campaign for reelection, each presenting differing views on the potential for cuts and reforms.