The Social Security Trust Funds will be exhausted in 2033, three years earlier than what the Social Security board of trustees had predicted a year ago.
At that point, the funds will have enough non-interest income to cover about 75% of scheduled benefits, according to the trustees' report.
Costs for running the two funds — known as Old-Age and Survivors Insurance and Disability Insurance trust funds — will exceed non-interest income in 2012 and will remain higher for the remainder of the 75-year period. Assets in the funds earned interest at the rate of 4.4% last year.
Total expenditures for both of the trust funds totaled $736 billion in 2011. Social Security shelled out $725 billion in benefits last year to 55 million beneficiaries.
Medicare's hospital insurance fund is set for an exhaustion date of 2024, which is what was predicted last year. Congress last year enacted a 2% cut in Medicare under the Budget Control Act of 2011. Total Medicare expenditures were $549 billion in 2011.
Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services, noted that health care reform helped strengthen Medicare.
“Today's trustee report that Medicare is in a stronger position than it was in previous years is thanks to the Affordable Care Act,” she said at a press conference Monday. She added that the law's crackdown on fraud, prevention of costly errors by providers and the end of excess payments will save Medicare more than $200 billion through 2016.
Predictions were dire for the Disability Insurance trust fund, however, which will be exhausted in 2016, compared with the prediction of 2018 last year.
The trustees determined that the Old-Age and Survivors Insurance and Disability Insurance trust funds would need another $8.6 trillion in today's dollars over the 75-year period in order to pay all scheduled benefits.
Trustees are encouraging Congress to work toward ensuring the solvency of the funds. Congressional members would need to act within four years in order to avoid automatic cuts to people receiving disability benefits, said Michael J. Astrue, Social Security commissioner.
“Under current law, these programs are on unsustainable paths,” said Robert D. Reischauer, trustee and former director of the Congressional Budget Office. The sooner policymakers take steps to fix the programs' funding problems, the better the likelihood that the solutions the board of trustees adopts are equitable, he added.