Questions and Answers about the Medicare and Social Security Trust Funds
Cox News Service
Wednesday, March 26, 2008
WASHINGTON — Here are answers to common questions about the Social Security and Medicare trust funds:
Q. What's the bottom line for the Medicare and Social Security trust funds?
A. Medicare's hospital trust fund will not be able to fully pay benefits beginning in 2019.
The Social Security trust fund will not be able to fully pay benefits beginning in 2041.
The Medicare trust funds that cover physicians and pharmaceuticals will remain solvent indefinitely.
Q. How does that compare to last year's report?
A. The insolvency dates have not changed from last year's prediction. But that means the funds' life expectancy is one year shorter than previously.
Q. Will Social Security be there when I retire?
A. It depends when you retire.
If you are 60 years old this year and retire at age 67 in 2015, Social Security should continue paying full retirement benefits until you are 93 years old.
If you are 40 and retire at age 67 in 2035, Social Security would be able to pay full benefits for about six years, until you're 73.
If you are 20, and retire at age 67 in 2055, Social Security will not be able to pay full benefits.
After 2041, Social Security would be able to pay about 78 percent of full benefits, unless changes are made.
Q. When will the trust funds actually face a shortage?
A. Medicare's hospital trust fund payments are expected to exceed income from payroll taxes this year. Full payments will continue to be made because of assets and interest credited to the fund.
Social Security's trust fund payments are expected to exceed payroll taxes in 2011.
Q. Is there really a Social Security or a Medicare "trust fund?"
A. Yes, but they're not money sitting in a vault. The trust funds are an accounting device. The government promises to pay the amounts in the trust funds, which rely on the "full faith and credit" of the U.S. government.
Q. How can the programs be saved?
A. That's a political question that is likely to be hotly debated during this presidential election year. The short answer is that payroll taxes will likely be raised and benefit levels reduced over time. To what extent that will happen will depend on Congress and the president.