Social Security And Medicare Funds Could Run Dry Earlier Than Expected, New Report Shows

Social Security and Medicare’s main trust funds will be depleted in 2033, a year earlier than last forecast, trustees said Wednesday.

What Happened: The annual report advanced Medicare’s insolvency date by three years after higher-than-expected 2024 hospital spending and slower wage growth eroded reserves. Unless Congress acts, benefits would fall 23% for Social Security and 11% for Medicare hospital care.

Treasury Secretary Scott Bessent, Health and Human Services Secretary Robert F. Kennedy Jr. and the other trustees urged urgent legislative action to protect roughly 70 million Social Security beneficiaries and 66 million Medicare enrollees.

Payroll taxes — 6.2% for Social Security on earnings up to $176,100 in 2025 and 1.45% for Medicare on all wages — remain the programs’ primary revenue source. Because outlays already exceed income, reserves will be tapped annually until they vanish. After that, payroll collections would cover only 79% of scheduled Social Security checks.

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Why It Matters: Progressive groups such as Social Security Works urge Congress to scrap the wage cap and tax high earners, while the Cato Institute backs slower benefit growth to close the gap.

Public anxiety is rising too. A recent survey found 60% of Americans fear the program will “vanish” before they retire, a worry advisers say is driving early claims that permanently shrink checks.

There have also been proposals to raise the full retirement age beyond 67 and to lean on immigration, which generally boosts payroll revenue, though both ideas face partisan gridlock. History shows Congress often waits until deadlines loom; with just eight years left, lawmakers must soon decide whether to raise taxes, curb benefits or adopt a mix of both.

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