The total cost of Social Security will exceed its income resources this year for the first time since 1982.1 For now, trustees expect current taxes, interest income on reserves and trust fund asset reserves to provide the funding necessary for both Social Security and Medicare. However, trust fund reserves are projected to be depleted at the end of 2034 — just 16 years from now. At that time, assuming no legislative action, it is estimated that Social Security would be able to pay 75 percent of scheduled benefits.2
There hasn’t been much movement on this issue since the 115th Congress convened in January 2017. This June, Sen. Bernie Sanders (I-VT) introduced the Social Security Administration Fairness Act, which proposed eliminating the months long waiting period for disabled worker benefits for both Social Security and Medicare coverage. Sen. Ron Wyden (D-OR) introduced the Elder Poverty Relief Act, this April, which proposed authorizing an additional monthly benefit of approximately $85 for 2019, with subsequent increases based on the national average wage indexing (AWI) series. However, neither piece of legislation has passed committee review.3
House Republicans have drafted a proposal designed to balance the budget in nine years by making large cuts to entitlement programs. Recommendations include offering retirees the option to enroll in private Medicare plans that compete with traditional Medicare. The plan also features a $4 billion cut from the Social Security budget spread over 10 years.4
If you have questions about how Social Security or Medicare might affect your retirement income strategy, don’t hesitate to give our office a call.
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1 Aimee Picchi. CBS News. June 5, 2018. “Social Security says system’s costs will exceed income this year.” https://www.cbsnews.com/news/social-security-says-costs-will-exceed-income-this-year/. Access Sept. 10, 2018.
2 Social Security Administration. “Proposals Affecting Trust Fund Solvency.” https://www.ssa.gov/oact/solvency/. Accessed Aug. 21, 2018.
3 Ibid.
4 Erica Werner. The Washington Post. June 19, 2018. “House GOP plan would cut Medicare, Medicaid to balance budget.” https://www.washingtonpost.com/news/business/wp/2018/06/19/house-gop-plan-would-cut-medicare-social-security-to-balance-budget/?utm_term=.715263cfe64a. Accessed Aug. 21, 2018.