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When the Social Security Administration releases its annual analysis of both the Social Security and Medicare programs this year, experts suspect some key information will be missing.
Social Security’s two trust funds, dedicated to its retirement and disability benefits, are facing insolvency. If nothing is done to fix the problem, they’re expected to be depleted by 2035, according to last year’s trustees report. Although the trustees explain the current and projected status of Social Security and Medicare, they likely won’t mention the debt ceiling and a potential crisis looming over beneficiaries’ heads, Social Security experts said.
“What they’re focused on is the cash flow,” said Nancy Altman, president of Social Security Works.
The report, which is expected to be released by April 1, might shed more light on COVID-19’s impact on the program, said William Arnone, chief executive officer of the National Academy of Social Insurance. The pandemic affected Americans in various ways, including health issues and lost jobs and wages. Disability insurance claims, for example, have gone down, as have the benefits awarded to beneficiaries, but there is still a backlog of claims, Arnone said. The trustees might share what direction they see the program going to catch up with those claims, he added.
The year in which the trust funds are depleted will likely stay the same, or move up or down by a year, experts said.
See: A battle over Social Security is coming in 2023, and some retirees are gearing up for a fight
Economic assumptions are made at the beginning of the year, so last year’s report did not properly account for the economic volatility and inflation Americans experienced.
“If they correct for that, then things might look a little bit worse this year,” said Andrew Biggs, senior fellow at the American Enterprise Institute and President Biden’s nominee for the Social Security Advisory Board. “That doesn’t necessarily mean the trust fund exhaustion date will change.”
The trustees, who use a 75-year projection period in their report, will likely touch on important factors, such as inflation, gross domestic product growth, real wages and employment.
If Congress were to do nothing about the depletion of the Social Security trust funds, beneficiaries would see a 20% cut to their checks, according to last year’s analysis.
The government has never let the program falter, but legislators have yet to decide on the best course of action. Some suggestions include raising the full retirement age, which is linked to when and how much beneficiaries receive when they begin claiming Social Security, or increasing taxes. Other politicians say that along with fixing the insolvency issue, the program should be expanded to provide caregivers with credits for their time out of the workforce and linking the cost-of-living adjustment to the consumer price index for older Americans, which better reflects their spending.
“Congress has plenty of time to act, and they better act because of what the American people want,” Altman said.
