According to 2019 projections by the Social Security Board of Trustees, the program’s expenses will exceed its income in 2020 for the first time since 1982. Social Security’s reserve fund is expected to be depleted in 2035, at which time beneficiaries will receive smaller payments than scheduled (about 20% across the board) if Congress does not take action. Medicare is expected to be insolvent even sooner – in 2026.
The problem is clear and more than one path leads to solvency. Congress will likely do what previous reforms have done, and bring spending and revenue back into line through some combination of benefit cuts and payroll tax hikes. In addition, they are unlikely to change benefits significantly for anyone over age 50. We recommend that younger individuals, particularly higher earners, should be prepared for some cuts in their benefits.
