Key facts
- Social Security's retirement trust fund is projected to be insolvent by 2032.
- Medicare's Hospital Insurance trust fund is projected to be insolvent by 2033.
- The combined Social Security trust funds face a 75-year actuarial shortfall of 4.42% of taxable payroll.
- Medicare's HI trust fund faces a 75-year shortfall of 0.56% of payroll.
- A new proposal suggests a bipartisan commission to address the financial challenges of Social Security and Medicare.
Annual reports from the Social Security and Medicare Trustees highlight worsening financial outlooks for both critical programs. The projections indicate that the Social Security retirement trust fund will deplete its reserves by 2032, and the Medicare Hospital Insurance (HI) trust fund will become insolvent a year later, in 2033. These reports show a 75-year actuarial shortfall of 4.42% of taxable payroll for Social Security, a 16% increase from the previous year, and a 0.56% shortfall for Medicare's HI fund, a 33% increase. Without legislative action, Social Security insolvency could lead to a 22% benefit cut for future retirees, potentially growing to 38% by 2100. Medicare's HI fund depletion could result in an 11% reduction in hospital payments. Total Medicare costs are expected to rise from 4.1% of GDP in 2026 to 7.5% by 2100.