The government's retirement benefits programs will run out of money three years earlier than previously thought, its trustees said on Monday, increasing the pressure on lawmakers to reform the federal safety net for millions of Americans. The trustees said the Social Security fund for retirees will become insolvent in 2033. But it said the Medicare funds will run out in 2024, the same forecast as last year.
The trustees said a key factor in revising the Social Security estimate was the view that Americans' average real earnings were likely to grow more slowly than previously thought, thus crimping revenues from taxes that finance the fund.
"Lawmakers should address the financial challenges facing Social Security and Medicare as soon as possible," the trustees' annual report said. "Taking action sooner rather than later will leave more options and more time available to phase in changes so that the public has adequate time to prepare," it said.
The deteriorating shape of Medicare and Social Security funds -- largely because of an aging U.S. population and rising healthcare costs -- highlights the need to overhaul the costly benefits programs and adds fire to the debate over how to rein in government spending.
Thirty-six percent of the U.S. budget is used to pay for health care insurance for 47 million Americans and benefits for 56 million retirees -- making them the two largest federal expenditures.
Trustees said the disability insurance program alone, which is generally lumped in with Social Security, faces the most immediate financing shortfall. It said that fund will likely be depleted in 2016, two years earlier than projected last year.
(Reporting By Glenn Somerville, Rachelle Younglai, Donna Smith)