Social Security won't be able to pay full benefits in 2034 if Congress doesn't act
Social Security will not be able to fully pay monthly benefits to tens of millions of retirees and people with disabilities in 2034 if lawmakers don't act to address the program's pending shortfall, according to an annual report released Wednesday by Social Security's trustees.
The combined Social Security trust funds – which help support payments to the elderly, survivors and people with disabilities – are expected to be exhausted in 2034, one year earlier than previously forecast, according to the trustees' annual report. At that time, payroll tax revenue and other income sources will only be able to cover 81% of benefits owed.
The deterioration in the forecast stems from several factors, including a law passed by Congress last year that increased benefits for certain workers and the trustees' assumption that it will take longer for the nation's fertility rate to recover from historically low levels. Average earnings are expected to grow somewhat more slowly over the coming decade, according to the report.
Medicare's fiscal outlook also worsened. Its hospital insurance trust fund, known as Medicare Part A, is expected to be able to cover scheduled inpatient hospital benefits until 2033, compared to 2036 in last year's report from the program's trustees. At that time, Medicare will only be able to pay 89% of total scheduled Part A benefits, which also cover hospice care, short-term skilled nursing facility services and home health services following hospitalizations.
The program's trustees project that Medicare's trust fund will be drained sooner because of increased medical spending in 2024, which also raised the forecast for future expenditures. Plus, the trustees raised their assumed growth level of inpatient and hospice services in coming years.
Medicare Part B, which covers physician services and medical supplies, and Part D, which covers prescription drugs, are financed through beneficiary premiums and federal contributions that are adjusted annually to cover costs. Their trust fund is fiscally sound.
The Medicare trustees are projecting that the standard monthly Part B premium will jump to $206.50 in 2026, from $185. The amount will not be finalized until later this fall.
The driving factor in the quickening of Social Security's trust fund insolvency is Congress' passage late last year of a bipartisan bill that increased benefits for nearly 3 million federal, state and local employees. The Social Security Fairness Act eliminated two policies that had reduced Social Security payments for public sector workers.
Experts had warned the measure would hurt the program's finances. It was a 'political giveaway masquerading as reform,' Romina Boccia, director of budget and entitlement policy at the libertarian Cato Institute, said in a statement.
'Instead of tackling Social Security's structural imbalances, Congress chose to increase benefits for a vocal minority — accelerating trust fund insolvency by 6 months in the process,' Boccia said. 'It's a clear sign that populist pressure now outweighs fiscal responsibility and economic sanity on both sides of the aisle.'
Looking solely at the trust fund that covers retirement and survivor benefits, Social Security will only be able to afford scheduled payments in full until 2033, three fiscal quarters earlier than last year's projection. At that time, the fund's reserves will be depleted, and continuing income will cover only 77% of benefits owed.
The Disability Insurance Trust Fund is expected to be able to cover full benefits at least through 2099, when the projection period ends. Merging the two trust funds would require an act of Congress, but the combined projection is often used to show the overall status of the program.
Just over 60.1 million people received Social Security retirement and survivors benefits at the end of 2024, while 8.3 million Americans received disability benefits, according to the program's trustees. Some 67.6 million people were enrolled in Medicare.
Social Security and Medicare have long been on shaky financial ground, largely because the nation's population is getting older and living longer. The number of beneficiaries is ballooning, but fewer workers are paying into the programs. Also, health care usage and spending are growing.
Social Security and Medicare, however, will not run out of money since current workers are paying payroll taxes, which support the programs. The problem is that the revenue will not be enough to fully cover the benefits owed after the trust funds run dry.
Still, the trustees' dire warnings are not likely to spur Congress to act any time soon, experts say. GOP lawmakers, who control both chambers, are focused on passing President Donald Trump's agenda bill. The president, meanwhile, has not released any proposals for extending the life of the entitlement programs' trust funds, promising only not to cut Social Security and Medicare as part of his megabill.
'Any politician who doesn't support increasing Social Security's revenue is, by default, supporting benefit cuts,' Nancy Altman, president of Social Security Works, an advocacy group, said in a statement.
The longer lawmakers wait to address the looming shortfall, the fewer options they will have, experts say.
'As the date gets closer and closer, Congress really needs to start getting more focused,' said Bill Sweeney, senior vice president for government affairs at AARP. 'The American public expects them to get focused on this, to protect the money that they've earned.'
Options to address Social Security's fiscal issues include raising the payroll tax rate; delaying the ages when people can start collecting benefits or receive their full retirement payments; increasing the amount of income subject to the payroll tax; and curtailing benefits or the rate at which they increase annually, among other proposals.
'Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare,' the trustees wrote in a message to the public.
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