Social Security trust funds will not be able to pay the full benefits from 2034, a year earlier than estimated last year, as projected by their administrators on Tuesday, as the COVID-19 pandemic forces them to re-evaluate the finance of the giant federal program.
The U.S. government also said the Medicare hospital insurance fund will run out in 2026, or at the same time as projected in 2020. It issued annual informative reports from administrators on Tuesday.
“The pandemic and its economic impact have had an effect on Social Security trust funds and the future course of the pandemic is still uncertain,” said Social Security Administration Acting Commissioner Kilolo Kijakazi. in a statement.
“Still, Social Security will continue to play a critical role in the lives of 65 million beneficiaries and 176 million workers and their families during 2021.”
Social Security has two programs, one for retirees and one that provides disability benefits.
The government said the Old Age and Survival Insurance Trust Fund will not be able to pay full benefits from 2033, a year earlier than planned last year, while the Disability Insurance Trust Fund will be will run out in 2057, or 8 years earlier. The hypothetical combined funds OASI and DI would be unable to pay the benefits scheduled on time in 2034, a year earlier, according to the government.
Senior government officials told reporters that the U.S. economic recession caused by COVID caused a drop in employment and therefore a decline in payroll tax revenue, and that it is accelerating the depletion of Social Security reserves.
They also said their latest projections took into account other effects of COVID and the recession, such as rising mortality rates, lower birth rates and declining immigration.
Annual reports have called for adjustments for years, but Washington lawmakers have been opposed to reducing hiking profits or taxes.
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