Fast Facts for August 31, 2021
If you or someone you know rely on Social Security for Disability or Retirement benefits or you’re on Medicare, a new government report just released by the Treasury Department says the programs are running out of money faster than originally thought.
Now – don’t freak out — it’s still a few years away but if the government wants to turn it around this report is warning –congress needs to do something about it soon.
The report says the Covid19 pandemic and the 2020 recession both impacted the amount of money in the pot that funds these programs and reserves. Many reasons were listed including –the rapidly aging population, the drop in GDP and interest rates and the fact that fewer people were paying into Social Security through their paychecks because they lost their jobs during the pandemic. The report says those things are only expected to get slightly better in 2023.
So what does it mean for your social security check. Before I tell you what the report says – you need to understand these are projections based on actuary assessments and lots of things can change between now and then.
Here we go –
If you, your parents or grandparents survive on Social Security checks, or you receive Disability payments — according to the projections in this report – when the reserves of these two programs are combined – these benefits will only be able to be paid out on a timely basis until 2034. That’s one year earlier than expected. By then the reserves will be completely depleted and if nothing is done – the programs will only pay out 78% of scheduled benefits.
Medicare part a will be able to pay scheduled benefits until 2026 the same year as was expected. After that the fund’s reserves will be depleted and the program will pay out 91% of scheduled benefits.
So what can congress do to fix this??? Increase payroll taxes paid by current workers, or increase government borrowing to cover the shortfall. And when it comes to Medicare, lawmakers could raise premiums paid by beneficiaries.
At the end of 2020, about 65 million people were receiving Social Security benefits and nearly 63 million were covered under Medicare
Report fact sheet here.
Report from the Treasury Department here.
