Social Security and Medicare update
Date posted: July 8, 2013
The trustees of the Social Security and Medicare programs just released their annual report. Does it have good news or bad news? N.C. State University economist Mike Walden responds.
“Well, a combination. Let’s first look at Social Security. The annual report of the trustees said that Social Security is going to have enough money — money both from what it is collecting each year from workers as well as money in its investments — to pay full benefits to retirees until 2033.
After that, Social Security will only have enough money from its collections to pay about 75 percent of promised benefits. So, we’ll have a problem with Social Security starting around 2033, based on the current projections.
Medicare — specifically the Medicare hospital insurance trust fund — is estimated to be depleted by 2026. Afterward, it will also only have enough money to pay about 75 percent of projected payments.
The fund that is in the worst shape is something called the Social Security disability trust fund. This is a separate part of Social Security that pays monies to people who have officially been declared disabled and unable to work. This fund — this trust fund — is expected to be depleted in only a couple of years, 2016.
Now they’re really four solutions to these issues. One, get money from other places, that is, from general tax payments. Reduce the level of payments, increase tax rates for these funds or to restructure the programs. None of these options, of course, are without controversy.”
Category: Economic Perspective