A strong labor market has improved the outlook for Social Security and Medicare, two of the most important social programs in the U.S. But trouble still lays ahead if Congress won’t take action to raise more money for the programs, which generations of Americans have counted on to help them get by in old age.
The annual report released by the Social Security Administration finds that the combined trust funds for Social Security and Medicare are now projected to run out in 2035, one year later than projected last year. The trustees credit the improvement to the country’s strong job market and wage growth over the past year.
The fund that pays out monthly benefits to seniors—known as the Social Security Old-Age and Survivors Insurance Trust—is projected to deplete its funds in 2033 without Congressional action. After that, the program would pay out around 79% of the scheduled benefits. There is another trust fund that sends monthly payments to disabled workers and their families, which the report says will be able to pay full benefits until at least 2098.
The report notes that if the old age and disability trust funds were combined, which could only happen if Congress passes a new law, then it would be able to pay out 100% of all benefits through 2035, and then 83% of the scheduled benefits after that.
Things are slightly rosier for the Medicare Hospital Insurance Trust Fund, with a separate annual report for that program estimating it will begin to run out of money in 2036. That’s five years later than last year’s forecast.
The fate of Social Security and Medicare are a major focus of the 2024 presidential election. President Biden has pledged to protect the programs, while his budget calls for raising taxes on the rich to fund them. Former president Donald Trump’s stance is less clear.
The trustees encourage lawmakers to take “action sooner rather than later,” which could include increasing the taxes that fund them or via other methods. About 67 million people received Social Security benefits in 2023, according to the report.