The 'Go-Broke Date' for Social Security Is Moved Up

Social Security and Medicare are heading toward financial trouble sooner than expected, according to new federal projections. The Treasury Department's latest reports show that Social Security's combined trust funds are now forecast to not contain enough money to pay full benefits in 2034—one year earlier than last year's estimate, Politico reports. Medicare's hospital insurance fund is set to be depleted in 2033, moving up its funding cliff by three years.

• This year, about 68 million Americans will receive Social Security benefits, while nearly 68 million depend on Medicare for health coverage. Both programs are currently paying out more than they collect from payroll taxes, forcing them to draw from their reserves.
• If Congress doesn't act before the funds are depleted, Social Security would only be able to pay about 81% of benefits after the "go-broke date," the AP reports. Medicare would cover around 89% of its obligations.
• The faster decline in Social Security's reserves is tied mainly to a new law expanding benefits for millions of public sector workers, signed by President Biden in January. Other factors include lower projected fertility rates and flatter long-term wage growth.
• Medicare's outlook worsened due to higher-than-expected spending and rising costs in hospital and hospice care. The Medicare projections are a reversal from last year, when the expected depletion date changed from 2031 to 2036 due to stronger predictions of economic growth, Reuters reports.

"This data underscores the need for lawmakers to take action to support the long-term viability of these programs," said Treasury Secretary Scott Bessent, adding that the Trump administration will continue targeting waste and fraud. Meanwhile, political debate continues over possible changes. President Trump has promised to eliminate taxes on Social Security benefits, but so far, Republican lawmakers have proposed smaller measures, such as increased tax deductions for seniors. (This content was created with the help of AI. Read our AI policy.)