The future of Social Security and Medicare just got a little more uncertain. According to the latest report to Congress from program trustees, both are now expected to run short of money sooner than previously projected—moving up already tight timelines and raising concerns for current and future retirees.
Social Security Trust Fund Now Projected to Run Dry in Early 2033
The Social Security trust fund that pays retirement benefits is now expected to be insolvent by early 2033, not late 2033 as previously estimated. That’s just over eight years away.
If Congress decides to merge the Social Security retirement and disability trust funds into a single account—a legal move that’s been done before—the combined fund is projected to run out in 2034, also a year earlier than previously expected.
This doesn’t mean Social Security will stop paying benefits entirely. But once the trust fund is empty, the system will only be able to pay out what it collects in taxes—which covers about 77% of scheduled benefits. That translates to an automatic 23% cut starting in 2033, or a 19% cut in 2034 if the funds are combined.
Medicare Hospital Insurance Also Facing an Earlier Shortfall
Medicare isn’t in the clear either. The trust fund that pays for Medicare Part A—which covers hospital stays, skilled nursing facilities, and hospice care—is now expected to be exhausted in 2033, three years earlier than previously projected.
If that happens and no changes are made, hospital benefits would be cut by 11%, putting added pressure on retirees who rely on Medicare to cover essential healthcare services.
Good news? Medicare Part B, which covers doctor visits and outpatient care, is expected to remain fully funded for the foreseeable future. It’s financed differently, mainly through premiums and general revenue.
What’s Driving These Funding Problems?
Several long-standing trends are accelerating the financial strain:
- People are living longer, meaning they collect benefits for more years.
- Birth rates have declined, so fewer workers are contributing payroll taxes.
- Costs have gone up, especially in healthcare and Social Security payouts.
- Recent laws, like the Social Security Fairness Act, added new benefit obligations without new funding.
Romina Boccia of the Cato Institute called the earlier insolvency date “a self-inflicted wound” due to increased benefit spending. She criticized the idea of propping up retirement funds with disability funds, calling it a “delay tactic” that avoids real reform.
Are These Really “Trust Funds”?
Despite the name, Social Security and Medicare trust funds don’t operate like private investment accounts. They’re essentially government IOUs—accounting mechanisms that show how much the Treasury owes to Social Security and Medicare.
Until 2010, the system took in more than it paid out, creating a surplus. Since then, it’s borrowed over $1 trillion to cover deficits, and it’s expected to borrow another $4 trillion before the retirement fund dries up.
And the math has shifted dramatically over time. In the 1950s, there were 16 workers paying taxes for every retiree. Today? Just 2.7 workers per beneficiary.
Fact Check: Clearing the Confusion
| Claim | Reality |
|---|---|
| Social Security is going bankrupt. | Not exactly. It will still pay reduced benefits—around 77%—unless Congress acts. |
| You won’t get anything after 2033. | False. You’ll still receive benefits, just lower unless funding is increased. |
| Medicare is entirely underfunded. | Only Part A is projected to run out in 2033. Part B remains stable. |
| Merging disability and retirement funds will fix it. | It only delays benefit cuts by about a year—not a real fix. |
| Trust funds are full of real money. | No. They’re IOUs—promises from the Treasury, not cash. |
Political Inaction and Generational Impact
The problem isn’t just financial—it’s political. Congress is currently tied up debating major tax-and-spend legislation, while long-term entitlement reform gets pushed aside. Boccia warns that the closer we get to insolvency, the harder the fix will be.
A big concern is generational fairness. People already in or near retirement likely won’t see major cuts. But younger Americans could end up paying more and receiving less, especially if no structural reforms are made.
Boccia believes Congress should create an independent fiscal commission with real authority to propose changes—before the crisis becomes unavoidable.
With Social Security and Medicare both on track to hit major funding shortfalls by 2033, time is running out for meaningful reform. While benefit cuts aren’t immediate, the clock is ticking—and without political will, younger generations may be left holding the bill.
FAQs:
Will Social Security stop paying benefits after 2033?
No. It will still pay out, but likely at around 77% of scheduled benefits.
What’s causing the faster depletion?
Longer retirements, fewer workers, rising costs, and recent benefit increases without funding offsets.
Is Medicare Part B affected?
No. Part B is funded through general taxes and premiums and remains stable for now.
