The trustees for Social Security and Medicare released a report on June 5, 2018 indicating that the benefits paid out by the Social Security program will exceed the program\u2019s income for the first time since 1982. As a result, the trustees will be forced to draw down on the program\u2019s trust fund to cover the difference. <\/p>\n
Based on current projections, the trust will be fully depleted in 2034, at which point Social Security will no longer be able to pay its scheduled benefits, unless Congress takes action to shore up the program. Without any corrective action, Social Security will only be able to pay about three-quarters of its benefits. <\/p>\n
The trustees also reported that the Medicare hospital insurance fund will be depleted in 2026. Unless changes are made, Medicare will only be able to pay about 91% of the program\u2019s benefits. <\/p>\n
Social Security is funded through payroll taxes paid by workers and employers. If this income exceeds the current benefit payments, the difference is invested in the trust fund. <\/p>\n
The reasons for the weakened state of these social programs include an aging population, longer life expectancies, and lower contributions to the trust.<\/p>\n
The solution to this chronic problem will involve raising eligibility ages, raising payroll taxes, reducing benefits and\/or implementing \u201cmeans testing\u201d.<\/p>\n
If you are currently receiving Social Security benefits, you can probably expect that the annual inflation increases you receive will continue to be very modest. If are age 40 to 60, you can probably expect your payroll taxes to go up at some point. If you are under age 40, you can expect to pay more in taxes and receive less in benefits than the generations that preceded you.<\/p>\n