Social Security says system's costs will exceed income this year

Social Security says system's costs will exceed income this year

Medicare will run out of money sooner than expected, and Social Security's financial problems can't be ignored either, the government said Tuesday in a sobering checkup on programs vital to the middle class. The report from program trustees says Medicare will become insolvent in 2026 - three years earlier than previously forecast.

The trustees also annually weigh in on the solvency of Social Security, whose total cost is projected to exceed total income this year for the first time since 1982. Their costs, however, are scheduledto grow from 2.1% of GDP in 2017 to 3.6% in 2037. Medicare is also expected to spend more than projected past year, the report said.

Last year, total program income - which includes payroll taxes, taxation of Social Security benefits and interest earnings - amounted to $997 billion, exceeding total expenditures of $952 billion.

Each year, the trustees project the long-term finances of Medicare, which covers about 58 million Americans. During the same period, about 62 million people received benefits, including retired and disabled workers, their eligible family members and survivors of deceased workers.

Treasury Secretary Steven Mnuchin said the latest report shows that Social Security and Medicare remain secure, but long-term problems persist.

The combined Social Security trust funds are slated to run dry in 2034, and that will force benefits to be cut more than 20 percent. Trustees for the retirement and disability program revealed on Tuesday that Social Security will no longer be able to meet its obligations to beneficiaries starting in in 2034, or 16 years from now - which is less time than has elapsed since terrorists slammed airplanes into the World Trade Center and the Pentagon in 2001. Taken separately, the fund for retirees is now expected to be depleted in 2034, a year earlier than last year's report, while the disability insurance reserves run out in 2032, four years later than projected last year. Some combination of revenue increases and benefit changes could also eliminate the projected shortfall.

Rather than cutting benefits, the Democratic-leaning Social Security Works coalition supports expanding benefits as a solution to the nation's looming retirement crisis by asking the wealthy to contribute more. The report says that income still needs to increase faster than the economy to cover future growth.

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