Social Security trust funds won't be able to pay full benefits by 2034, one year earlier than previously projected, due to the impacts of the COVID-19 pandemic, the U.S. Treasury Department said Tuesday.
In its annual summary of Social Security's reserves, the program's trustees said the Old-Age and Survivors Insurance and the Disability Fund, designed to provide a source of income to former workers who have retired or can't work due to a disability, have enough combined funds to pay scheduled benefits until 2034.
"At that time, the combined funds' reserves will become depleted and continuing tax income will be sufficient to pay 78% of scheduled benefits," the report stated.
The Old-Age and Survivors Insurance will be able to pay scheduled benefits until 2033, running out one year sooner than reported last year and the Disability Insurance fund will have adequate funds to make payments through 2057, depleting eight years faster than previously anticipated.
Medicare, which helps pay inpatient hospital care and other health services will be able to pay scheduled benefits until 2026, the same date reported in 2020.
The report specifically cited the impacts of the COVID-19 pandemic, which were not included in last year's report, for the accelerated depletion of funds.
"The finances of both programs have been significantly affected by the pandemic and the recession of 2020," the report stated.
As a result of the pandemic, the trustees projected increased rates of mortality through 2023, as well as reductions in immigration and childbearing in 2021-22 from the levels projected in 2020.
Employment, earnings, interest rates and economic growth all fell in the second quarter of 2020 after the pandemic spread throughout the United States, the report noted.
"All significantly impact the outlook of the programs," the trustees said.
Treasury Secretary Janet Yellen highlighted the importance of the programs in a statement accompanying the report.
"Having strong Social Security and Medicare programs is essential in order to ensure a secure retirement for all Americans, especially for our most vulnerable populations," she said. "The Biden-Harris administration is committed to safeguarding these programs and ensuring they continue to deliver economic security and healthcare to older Americans."