ibusinesslines.com October 18, 2018

Social Security says system's costs will exceed income this year

06 June 2018, 10:41 | Melissa Porter

Social Security says system's costs will exceed income this year

The Social Security Administration’s main campus is seen in Woodlawn Md. Medicare’s financial problems have gotten worse and Social Security’s can’t be ignored forever

The total costs of Social Security will exceed total income this year for the first time since 1982, according to the annual Social Security and Medicare trustees report released on Tuesday, as funds for Medicare are expected to run dry earlier than expected.

The report says Social Security will become insolvent in 2034.Unless lawmakers act, both programs face the prospect of being unable to cover the full cost of promised benefits.

The trustees forecast that 100% of benefits will be covered through 2034, after which the trust funds for Social Security, which also cover old age and disability insurance programs, will only be able to cover about 79% of benefits. In reality, it has been running annual deficits since 2010, and the insolvency date has moved up eight years.As the Social Security crisis keeps getting closer, the political parties are moving further away from doing anything about it.What's scary is that Social Security is relatively easy to fix when compared to Medicare, a program where the rising retirement population is interacting with growing healthcare costs. Good advisors have been factoring uncertainty around Social Security into their clients' plans for many years now. For Medicare, it could mean that hospitals, nursing homes and other providers of medical care would be paid only part of their agreed-upon fees.

Medical costs have long outpaced economic growth, and despite some slowdowns in cost over the past few years, that has not changed. Options include raising the maximum income cutoff for imposing Social Security taxes, now $127,200. The public trustees are usually more candid, but those posts remain unfilled.

Additionally, President Trump's decision to end a program offering young undocumented immigrants reprieve from deportation while allowing them to work reduced anticipated tax revenue into the Social Security program.

But speaking to reporters on Tuesday, Treasury officials said the cuts were set to decrease revenues for both programs.

The Congressional Budget Office said in April that federal deficits and debt would soar in the coming decade, following passage of the tax overhaul and legislation to increase military and domestic spending. That money is invested in special government securities, which also collect interest. Advocates for the elderly said today there should be no cuts to Social Security benefits.

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