Social Security & Medicare Annual Reports: What You Need to Know
1. Social Security – A Quick Look at the Basics
2. Report Says Social Security Still Solvent, But a Big Change
3. Medicare to Go Broke in 2026 or Even Sooner
4. Conclusions: We Desperately Need Entitlement Reform
Once each year, the Trustees of the Social Security and Medicare trust funds are required to provide a detailed status report to Congress, including financial projections well into the future. The latest reports were provided to Congress last week. There was good news and bad news, as usual.
Today, I will summarize the results of the latest reports on our nation’s largest entitlement programs below. While most Americans pay little attention to these annual reports, this is important information we all need to be aware of – especially this year.
This year, for the first time in 36 years, both Social Security and Medicare will have to begin drawing down their reserves (ie – assets), rather than paying benefits from the interest earned on those reserves. These annual reserve drawdowns will continue every year going forward until those reserves are depleted in the years ahead.
You might want to save this E-Letter in a convenient place where you can refer back to it from time to time. You may also want to share it with family and friends who may ask you for advice about these safety net programs in the future as their solvency status becomes more and more dire.
Social Security – A Quick Look at the Basics
The US Social Security Administration (SSA) is an independent agency of the federal government that administers Social Security, a social insurance program consisting of retirement, disability and survivors' benefits. To qualify for these benefits, most workers pay Social Security taxes on their earnings throughout their working lifetimes. The claimants’ benefits are based largely on the wage earner's contributions.
The program was created as part of the Social Security Act passed in August 1935 under President Franklin Roosevelt. In 1939, the Social Security Board merged into a cabinet-level federal agency which has grown immensely since then.