Social Security will only be able to pay 'three-quarters of the promised benefits' starting 2035 as funds start to deplete
Tens of millions of American will only be getting around three-quarters of their Social Security benefits when they retire if Congress doesn't act soon.
According to an annual report that was released on April 22 by trustees of the government's two largest entitlement programs, the Social Security trust funds will be completely depleted by 2035. This is one year later than the report had projected last year.
The new projection in the report does not mean that retirees will not be able to get their checks in 16 years but the program will only have revenue coming in to pay "three-quarters of the promised benefits" till the end of 2093 at that point, CNN reported.
The trustees have pleaded with lawmakers to act swiftly and assure the public that they will be able to get their full retirement benefits.
Treasury Secretary Steven Mnuchin, along with three other trustees including Alex Azar, secretary of Health and Human Services, wrote in their report to Congress: "Lawmakers have a broad continuum of policy options that would close or reduce the long-term financing shortfall of both programs."
Lawmakers, however, have been discussing the Social Security problems for a long time now and this would likely mean that payroll taxes are raised, benefits are curtailed or it could be a combination of both. President Donald Trump said in his 2016 campaign that he wouldn't go near Social Security.
He said that he didn't believe he would need to because his plan of boosting economic growth by 4% would take care of Social Security's long-term solvency.
For the first time since 1982, Social Security's total cost is expected to go above its total income in 2020 and it will continue that way through 2093.
Social security costs are expected to not rise for the next 20 years as the Baby Boom generation retires.
At the end of last year, the Social Security program provided benefits to around 63 million people, who were mainly retired workers, but also their dependents and their survivors. The program also provided benefits for disabled workers and their dependents.
According to the left-leaning Center on Budget and Policy Priorities, the American population which is 65-years-old or older is projected to grow by more than a third between now and 2040. This alone is said to boost Social Security spending from nearly 5% of the economy to around 6% in 20 years, where it is expected to stay.
It is this shift in demographics, along with the obviously rising costs of health care, that will cause Medicare to spend 6.5% of the economy from the previous 3.7% over the same period. Medicare's future has now become the focus of the 2020 presidential campaign, with multiple Democratic candidates looking to expand the program to younger Americans or to create a universal health care system called Medicare for All.
The White House, officials of the administration, and Republican lawmakers have used the opportunity to slam the idea of broadening Medicare in the report.
White House press secretary Sarah Sanders in a statement: "The report also underscores the recklessness of proposals to dramatically expand Medicare, which amount to a total government takeover of healthcare that would eliminate private sector options and actually jeopardize seniors' access to healthcare, while further straining the federal budget."
Government watchdogs have been urging Congress lawmakers to set aside their partisan differences and protect the benefits of retirees, both current and future.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said: "Efforts should be taken now and phased in over time to slow the growth of health costs in Medicare and restore sustainable solvency to Social Security. But every day that passes, the problem gets bigger and the solutions become more difficult to implement."