The pandemic has pushed Social Security closer to precarious financial territory, the government warned in a report released Tuesday. The annual report from the Social Security and Medicare trustees said that unless Congress takes action, Social Security will no longer be able to pay full benefits by 2034, CNN reports. That's a year earlier than last year's projection. The trustees said that after 2033, the trust funds involved will only be able to pay 78% of benefits to retired and disabled people.
The equivalent date for Medicare's inpatient care trust fund is 2026, unchanged from last year's projection, according to the trustees. The outpatient and prescription drug funds, which are partly funded from general revenue, are "adequately financed into the indefinite future," the report said. Officials also said next year's cost-of-living increase is likely to be around 6%, the highest in decades, because of recent increases in inflation, CNBC reports.
"The finances of both programs have been significantly affected by the pandemic and the recession of 2020," the Social Security and Medicare trustees said, adding that the long-term effects of the pandemic are unclear due to the "unprecedented level of uncertainty." The recession sharply reduced revenue from payroll taxes, but the large number of deaths among older people will reduce future Social Security payouts, the AP reports. It's also unclear whether those who survived the pandemic will be unhealthier in the long run because of conditions including long-haul COVID. (Read more Social Security stories.)