The Medicare program will face insolvency in 2026 and Social Security funds not be able to pay full benefits after 2033, according to reports released by their boards of trustees on Friday.
But more immediately, Social Security’s Disability Insurance program will face trust fund depletion in 2016, according to a summary of the reports.
“Neither Medicare nor Social Security can sustain projected long-run programs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers,” the trustees said.
“If lawmakers take action sooner rather than later, more options and more time will be available to phase in changes so that the public has adequate time to prepare,” they said. “Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits.”
The reports said that together, Social Security and Medicare, accounted for 38% of federal expenditures in fiscal year 2012.
But both programs are expected to experience cost growth substantially in excess of gross domestic product growth through the mid-2030s due to both rapid aging of the population caused by the large baby-boom generation entering retirement and lower-birth-rate generations entering employment.
Another factor for Medicare is that the growth in expenditures per beneficiary is exceeding growth in per capita GDP, the reports said.
