June 23, 2016 — The 2016 report of the independent Trustees of Social Security is out, and the news is nothing to be too happy about. Both Medicare and Social Security will soon be paying out more than they take in. The only small blessing for those currently receiving Social Security benefits is that it looks like there might be a small COLA (Cost of Living Adjustment) of 0.2% headed their way in 2017. Here are some other takeaways from the report, which make it clear that action is needed to keep benefits at least at current levels:
– Trust Fund reserves in the Social Security program that pays benefits to retirees, spouses, and their survivors (OASI) are projected to become depleted in 2035 (unchanged from last year’s report). At that time income coming in would be sufficient to pay 77 percent of OASI scheduled benefits. The elimination of the File and Suspend loophole will help modestly.
– The Trust Fund asset reserves of the Disability component of Social Security (DI) are projected to become depleted in the third quarter of 2023 (thanks to legislative efforts, that happens 7 years later than reported last year). At that time continuing income to the DI Trust Fund would be sufficient to pay 89 percent of DI scheduled benefits.
– The hospital-insurance trust fund for Medicare will exhaust its reserves by 2028. That is 2 years earlier than reported last year, but several years later than in 2009. The projections bounce around because of changing health care costs, benefit utilization, and revenues into the system. As the American population ages, benefits paid out can only go up.
Here is the link to the full 2016 Social Security Trustees Annual Report, which has more facts and background than you could ever imagine (much of quite interesting!)
Comments? It is clear that something has to be done to protect the Medicare and Social Security benefit programs that so many people rely on. Without changes, benefits have to be cut – but how will we pay to fix the problem? Please share your suggestions on the fairest and best way to fix the system please. Let’s keep it positive, no political rants, please.
Forbes: The Truth About Solvency of Social Security