Medicare, Social Security running out of money faster than expected

Medicare, Social Security running out of money faster than expected

Medicare's financial problems worsened last year while Social Security still faces a significant long-term financial crunch - and will need to tap into its reserves for the first time in 36 years, according to annual reports released Tuesday by the programs' trustees.

Social Security and Medicare will experience cost growth substantially in excess of GDP growth through the mid-2030s due to rapid aging of the Baby Boomer generation, and lower-birth-rate generations entering employment.

Medicare Part A's trust fund is funded through payroll taxes, split between employer and employee. "I will continue to fight for working and middle class families to ensure that their hard-earned benefits are preserved, and to oppose efforts to privatize Social Security and Medicare".

In 2017, Medicare covered 58.4 million people, with 49.5 million older than 65.

This year, the program's cost will outstrip total income by $2 billion and non-interest income by $85 billion, the report said.

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Social Security's Old-Age and Survivors Insurance Trust Fund, and Disability Insurance Trust Fund will be depleted in 2034, the same year projected in last year's report. But the fund that helps tens of millions of retirees is expected to be depleted a year earlier than projected a year ago, while the outlook for the disability trust fund is more favorable. Stores for the retirement program will be exhausted a year earlier, though, in 2034.

"The administration's economic agenda - tax cuts, regulatory reform, and improved trade agreements - will generate the long-term growth needed to help secure these programs and lead them to a more stable path", Mnuchin said in a statement. SSA had previously estimated that the Protecting and Preserving Social Security Act would strengthen the program by covering these costs and benefits for an additional 25 years, until 2059-further strengthening the basic safety net for millions of Americans, including many of those who have worked hard for their entire lives.

The trustees also expect Medicare spending "will increase in future years at a faster pace than either aggregate workers' earnings or the economy overall".

"With modest legislated increases in revenue, Social Security will be able to pay all scheduled benefits for the foreseeable future", the nonprofit organization said in a background report issued in advance of the trustees' report.

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