WASHINGTON (AP) — The financial outlook for Social Security and Medicare has worsened, with the retirement trust fund now projected to run short of funds by 2032, one year earlier than previously estimated, according to an annual report released Tuesday by the programs' trustees. The Medicare hospital insurance trust fund is expected to be unable to pay full benefits by 2033, unchanged from last year's projection.
Rising healthcare costs and increased government spending have accelerated the depletion timeline, bringing the funding shortfall to within a decade. The report emphasizes that the situation represents a partial funding gap, not a complete collapse.
Even after the trust funds are depleted, the system will continue to pay benefits, though at reduced levels. Last year, Medicare's hospital insurance trust fund depletion date had been pushed to 2033 from 2036 in prior estimates.
Social Security's combined trust funds, covering both old-age and disability recipients, are expected to be unable to pay full benefits starting in 2034, the same as the 2025 report. After that point, incoming revenue would cover approximately 83% of scheduled benefits.
Social Security Commissioner Frank Bisignano stated that the Trump administration is committed to protecting and strengthening Social Security by eliminating waste, fraud, and abuse, and ensuring program integrity. The trustees, which include the Treasury Secretary, Labor Secretary, Health and Human Services Secretary, and the Social Security Commissioner, noted that the latest findings underscore the urgency of making changes to the programs, which have faced dire financial projections for decades.
However, reforming Social Security and Medicare has long been politically unpopular, and lawmakers have repeatedly deferred action. AARP CEO Myechia Minter-Jordan called the report a wake-up call, urging Congress to act.
She emphasized that Americans have worked hard and paid into Social Security their entire lives and deserve to rely on it in retirement, adding that no family should see cuts to their earned benefits. Currently, about 1 million people are enrolled in Medicare, the federal health insurance program for those aged 65 and older, as well as individuals with severe disabilities or illnesses.
Social Security benefits were last reformed roughly 40 years ago, when the eligibility age was raised from 65 to 67. The eligibility age for Medicare has never changed from 65.