The Social Security program is running out of money and will no longer be able to pay out full benefits by 2035, according to a new report released by the Trump administration.
The report says that payments will need to be reduced by 25 percent in 2035 to keep the program solvent unless Congress acts.
The report notes that the Social Security program has about $3 trillion in reserves but will have to begin using those funds in 2020 and expects for the reserves to be depleted by 2035.
If Congress does not act, Americans who are 51 years old or younger today will not be able to collect their full benefits.
Monday’s report shows that Social Security paid out benefits to 63 million people in 2018, including 47 million retirees and their dependents.
About two-thirds of seniors on the program rely on it as their primary source of income.
"Social Security’s total cost is projected to exceed its total income (including interest) in 2020 for the first time since 1982, and to remain higher throughout the remainder of the projection period," the report said.
Medicare program running out of money too:
The Trump administration also said Monday that Medicare’s hospital care trust fund is expected to run out of money by 2026.
The report said that the overall cost of Medicare is expected to rise from 3.7 percent of the GDP last year to 5.9 percent of the GDP by 2038.
The growth is linked to more people aging into the Medicare program and the increase of health care services.
"Lawmakers have many policy options that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare," the report says. "Lawmakers should address these financial challenges as soon as possible."
Social Security, Medicare need reform:
“Options to fix the program could include increasing the payroll tax, raising the retirement age or modifying the formula that determines how people receive their benefits. Some 94% of workers participate in Social Security,” ABC News reported. “One House bill would expand benefits for individuals, implement a payroll tax to earnings that are more than $400,000, and lower taxes for some recipients, among other things.”
House Ways and Means Committee Chairman Richard Neal blamed “years of Republican’s harmful policies” on the decline of the programs.
“As Ways & Means Chairman, I believe deeply in this Committee’s ability – and responsibility – to find solutions that provide more Americans with the economic security they need to support their families and have financial peace of mind," he said in a statement.
But advocates also worry that reforms could cut benefits for people that depend on them.
“Americans have earned their Social Security and Medicare benefits through a lifetime of hard work," Richard Fiesta, the executive director of the Alliance for Retired Americans, told The Hill. "If we remove the cap on earnings subject to Social Security contributions for the wealthiest Americans, we can expand Social Security benefits, provide a more accurate formula for cost-of-living adjustments, and increase the system’s long-term solvency.”