The Social Security and Medicare trust fund — the money that pays for those programs — won’t be able to pay everyone’s full benefits starting in 2033; best case scenario, 2035, the Social Security Administration reported to Congress on Monday.
If the Pentagon wants money, Congress decides, or sometimes fails to decide, to give it, along with how much to give and how to pay for it. That’s not how Social Security and Medicare work.
“The Social Security and Medicare programs operate out of trust funds. They’re not part of the federal budget,” said Bill Sweeney, senior vice president of government affairs at AARP.
Money goes into these trust funds from taxes on our paychecks and goes out to people who’ve reached retirement age. No Congress, just formulas and math. Unfortunately, the math isn’t mathing.
“When the program was set up, there were about four workers for every person receiving Social Security benefits. That number’s under three today, and it’s expected to get closer to two,” Sweeney said.
So by about 2033, the formula starts to break. Social Security and Medicare do not go broke, they just can’t pay what they’re supposed to.
“This projection indicates benefits will be cut immediately after 2033 by 21%,” said Will McBride, vice president of federal tax policy at the Tax Foundation.
“Which is awful,” said Teresa Ghilarducci, an economics professor at the New School for Social Research.
“It will trigger huge increases in poverty rates,” Ghilarducci said.
The date at which Social Security and Medicare fall short was pushed out a few years in this forecast, helped by rising wages for lower income workers, Ghilarducci said. But it’s been floating around 2035 for decades.
“People who study politics say Congress probably won’t do anything until we are right on top of that date,” she said.
And by then it will be much more expensive to fix.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
