Social Security payment increases are projected to only increase about 0.2 percent next year while Medicare’s financial outlook is growing bleaker, according to a new report by trustees who oversee the two federal programs.
The report also noted that both programs face insolvency by 2034 unless action is taken. Report authors also urged elected officials to address the long-term funding shortfalls as soon as possible.
While the report is grim news for retirees at a time when our economy is increasingly out of balance and people are facing more challenges to their ability to sustain themselves, Social Security and Medicare are also strong, successful programs that need to be fixed, not dismantled.
The two programs have been key to lifting millions of Americans out of poverty for 80 years, and the next U.S. president will likely be crucial to their future. It’s just another reason why we must get out and vote for candidates who will stand with us.
Our endorsed presidential candidate, Hillary Clinton, strongly supports preserving Social Security and wants to expand the program for widowed women and those who took significant time away from the paid work force. She opposes closing the long-term shortfall on the backs of the middle class, whether through benefit cuts or tax increases and favors asking the wealthiest people to contribute more to Social Security.
Her opponent, Donald Trump, has not proposed a specific plan for Social Security or Medicare.
Social Security
In 2016, there were no cost-of-living increases in Social Security payments because inflation has been low. Using the average Social Security payment of about $1,232 per month, the average 2017 increase is about $2.50 per month.
According to the recent report, Social Security’s trust funds are slated to dry up by 2034, which would lead to the program being able to pay only about 79 percent of the benefits that workers are earning.
Medicare
The news may be even worse for Medicare, which trustees project will run out of reserves by 2028 — even earlier than last year’s estimate.
Should this happen, the program will only be able to pay for about 87 percent of inpatient, or Medicare Part A, costs for the program’s 55 million recipients.
While coverage for Medicare’s outpatient and doctors’ bills (Medicare Part B) and prescription drugs (Medicare Part D) will continue to be fully funded under the law, costs for these components are expected to continue to rise, which will mean higher premiums and co-payments for many recipients.
Read the trustee report at ssa.gov/oact/trsum.
Social Security has lifted millions of people out of poverty, reducing the senior citizen poverty rate significantly. More than 60 million Americans receive Social Security benefits, with the majority of beneficiaries retired.
The Census Bureau noted in 2013 that without Social Security, the senior citizen poverty rate would be more than 50 percent. Because of Social Security, the actual poverty rate of seniors is about 15 percent.
According to a recent report from the White House, 97 percent of Americans between ages 60-89 are receiving or will soon receive Social Security benefits. For about 90 percent of people at least age 65, Social Security is a major source of income.
