That’s according to the annual Social Security and Medicare trustees report released on Monday, which said total costs of the program, which covers the old age and disability insurance programs, will exceed income in 2020 – for the first time since 1982. That’s two years later than projected last year, but means the program will have to dip into its reserves to cover benefits at that time.
By 2035 those reserves will be depleted, and 80 percent of benefits will be payable.
In 2018, the trustees forecast that 100 percent of benefits would be covered through 2034, meaning the trust fund gained an extra year before expected depletion. However, the trustees are still urging lawmakers to take action sooner than later.
“Both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing,” the trustees wrote.
Taken separately, the Old-Age and Survivors Insurance (OASI) trust fund will have enough reserves to pay full benefits through 2034. The Social Security disability fund, however, will not run out until 2052, about two decades later than what last year’s report projected. That change was attributed to a decline in disabled-worker applications and disability incidence rates.
The trustees combine the programs in the report to summarize the overall state of Social Security's finances.
Medicare’s hospital insurance trust fund is expected to run out of money in seven years, which remains the same as last year’s projections.
As a share of GDP, the annual cost of Social Security will increase to 5.9 percent by 2039 – up from 4.9 percent last year. Total Medicare costs will rise to 5.9 percent by 2038, up from 3.7 percent.
As of the end of March, more than 68.3 million people were receiving Social Security, Supplemental Security Income, or both. The average benefit was $1,347.06.
Combined, Social Security and Medicare accounted for about 45 percent of the federal budget in fiscal 2018.