On July 13, the annual trustee reports on Social Security and Medicare were released to review the health and viability of this program. The annual social security report estimates what payroll taxes will look like in the next few decades and how Medicare coverage will change as well. It then creates a report card for the health of Social Security in the future.
The content of the report itself should concern most Americans, whether they’re set to retire or not. However, this information could have an immediate impact on Social Security benefits over the next few years. Here are four questions MyFEDBenefits recommends that you should ask about the report:
What Did the Annual Social Security Report Find?
According to the experts at PBS Newshour, these annual reports have become somewhat of a “doomsday clock” for Social Security benefits. In particular, the magic number when experts discuss Social Security is 2034. This is the year that the expenses of Social Security will no longer be covered by payroll taxes.
According to the Trustees Report, payroll taxes in 2034 will cover 77 percent of Social Security expenses. However, problems in Social Security coverage are set to start much earlier than that. By 2029, payroll taxes will only cover 88 percent of Medicare Part A expenses.
While 2034 seems far away, it’s actually only 17 years out, and Americans who plan to retire in the next few could see dramatic changes to Social Security policies as the 2034 deadline approaches.
Who Monitors the Health of Social Security?
Tax policy tends to be a highly politicized topic, and even bipartisan commissions can become polarized in severe political climates like the one we’re in now. This often leaves people wondering who is in charge of analyzing the health of Social Security and promoting public policy.
Four government employees and two public trustees work as a committee to create the annual Social Security report. The public trustees are meant to work independently of government and provide unbiased, non-political insight to the process. However, for almost two years, public trustees haven’t been nominated, limiting the production of the Social Security health report to the four federal employees.
The Commission on Retirement Security and Personal Savings through the Bipartisan Center recently published a blog post on the importance of hiring public trustees.
“Public trustees have thus been an essential part of the oversight management of these programs in almost every year since the first appointments in 1984,” Timothy Shaw and Shai Akabas write. “This lack of oversight is particularly troubling given the precarious financial position of both programs and the long-term fiscal trajectory of the federal government, which is greatly impacted by these entitlements.”
Without unbiased trustees to review Social Security, proper oversight on Social Security benefits and the health of the overall program is virtually impossible.
Why Does This Report on Social Security Matter?
Many believe the public policy decisions made in the next few years will either set Social Security up for success or further debilitate it. This report on the health of Social Security is used as a call to action for lawmakers to improve the program and make it last.
“That data is so trusted, and valued, that it largely serves as the basis for all policy discussion for Social Security in Congress and the media for that matter,” Brenton Smith writes. “It feeds into policy decisions outside of Social Security.”
In the world of “fake news” and contradictory media outlets, everyone is questioning sources and looking for hidden bias in organizations and reporting. It’s more important than ever that materials used to sway Congress are completely accurate and unbiased. If Social Security is suddenly viewed as a partisan issue, then obstructionism from either party is possible.
Without independent trustees, the annual social security report doesn’t have the weight and credibility it had in previous years. This could make it harder to representatives to believe the report and feel compelled to take action.
How Could This Report Affect My Social Security Benefits?
The Office of Social Security itself actually created a document explaining some of the reasons why the current system isn’t very effective.
In 1940, about 55 percent of Americans were expected to live past 65 — the expected age for retirement. By 1990, almost 80 percent of Americans expected to live beyond 65 and the average life expectancy had grown to almost 80 years. The number of Americans who use Social Security benefits has increased, along with the length of time they need them.
Many politicians have advocated for creating an updated system that meets the needs of the modern American population. Thanks for modern medicine and advances in health, Americans are living longer, which means they need their retirement savings and Social Security benefits to last longer.
If Congress keeps waiting to fix the breaking Social Security system, then retirees might not receive the help they need to cover basic living expenses. While 2034 seems far away, the changes to the program need to be made soon to help extend (and even eliminate) that deadline. Remember, Americans who are set to retire in the next few years will start to turn 80 by 2034. This isn’t an issue for the future; it’s an issue for today’s retirees.
The time to focus on your retirement savings isn’t when you’re a retiree. If you’re worried about the future of Social Security, talk to the federal retirement specialists at MyFEDBenefits for help. They can provide you with a custom guide and look for ways to help you prepare for 2034.