Trustee Reports predict improved outlook for Social Security and Medicare

Published in RINewsToday on June 6, 2022

On June 2, 2022, following a meeting of the Social Security and Medicare Boards of Trustees, the Social Security Administration (SSA) – joined by the Departments of Health and Human Services and Labor, the Centers for Medicare & Medicaid Services, and the U.S. Department of Treasury — released a 275-page annual report giving us a snapshot of the financial health of the Social Security Trust Funds.

The Trustee reports findings

According to this year’s Trustee Reports, “Social Security and Medicare both face long-term financing shortfalls under currently scheduled benefits and financing. Costs of both programs will grow faster than gross domestic product (GDP) through the mid-2030s primarily due to the rapid aging of the U.S. population. Medicare costs will continue to grow faster than GDP through the late 2070s due to projected increases in the volume and intensity of services provided.”

The Social Security Trustees report that the combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds, paying benefits to 65 million retirees, disabled people as well as survivors of deceased workers, are projected to become depleted in 2035, one year later than projected last year, with 80 percent of benefits payable at that time. The DI Trust Fund asset reserves are not projected to become depleted during the 75-year projection period.

“It is important to strengthen Social Security for future generations. The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way to phase in necessary changes gradually,” says Kilolo Kijakazi, Acting Commissioner of Social Security in a statement announcing the released report. “Social Security will continue to be a vital part of the lives of 66 million beneficiaries and 182 million workers and their families during 2022,” she adds.   

The Medicare Board of Trustees note in its 263 page report that the projected depletion date for Medicare’s trust fund for inpatient hospital care (Part A), covering around 64 million retirees and disabled persons, moved from last year’s forecast of 2026 to 2028. At this time Medicare will only be able to pay 90% of the scheduled benefits when the fund is depleted.

“We are committed to running a sustainable Medicare program that provides high quality, person-centered care to older Americans and people with disabilities,” said CMS Administrator Chiquita Brooks-LaSure. In a statement “Medicare trust fund solvency is an incredibly important, longstanding issue and we are committed to working with Congress to continue building a vibrant, equitable, and sustainable Medicare program,” she says.

Thoughts from senior advocacy groups

In a statement, AARP CEO Jo Ann Jenkins said that this year’s Social Security and Medicare Trustee report sends this clear message to Congress: “The Social Security and Medicare Trustees’ reports should send this “clear message” to Congress: “Despite the short-term improvement, you must act to protect the benefits people have earned and paid into both now and for the long-term. The stakes are too high for the millions of Americans who rely on Medicare and Social Security for their health and financial well-being.”

“These reports also underscore the urgent need for Congress to pass legislation allowing Medicare to negotiate for lower prescription drug prices, which would result in billions of dollars of savings for seniors, the Medicare program, and taxpayers,” says Jenkins.

Jenkins also calls on Congress to increase funding to fix serious long-time Social Security customer service problems, which currently impede or keep seniors and people with disabilities from getting their benefits in a timely manner.

Following the release of the Trustees Report, Executive Director Alex Lawson, of the Washington, DC-based Social Security Works, (SSW) a social welfare organization that lobbies for Social Security Reforms, also issued a statement: “Today’s report shows that our Social Security system remains strong. Protecting and expanding benefits is a question of values, not affordability. That this year’s projections are even stronger than last year’s proves once again that Social Security is built to withstand times of crisis, including pandemics.”

We don’t have a Social Security crisis, but we do have a retirement income crisis. With prices rising, seniors and people with disabilities are struggling to afford food and medicine. The solution is to expand Social Security,” says Lawson. 

According to SSW, the 2020 Social Security Trustee’s Report reported that Social Security has an accumulated surplus of about $2.85 trillion.  It projects that, even if Congress took no action whatsoever, Social Security not only can pay all benefits and associated administrative costs until 2035, it is 90 percent funded for the next quarter century, 84 percent for the next half century, and 81 percent for the next three quarters of a century.  

“At the end of the century, in 2095, Social Security is projected to cost just 5.86 percent of the gross domestic product (“GDP”), less than most other wealthy countries spend on their counterpart programs,” says SSW.

Max Richtman, President and CEO of the Washington, DC-based National Committee to Preserve Social Security and Medicare (NCPSSM), throws in his two cents about this year’s Trustee Report. “The takeaway from the latest Social Security Trustees report is this:  Congress must strengthen the program’s finances without delay. The Trustees project that the combined Social Security retirement and disability trust fund will become depleted by 2035, one year later than projected in their previous report. At that point, every Social Security beneficiary will suffer a 20% cut to their benefits.”

“Seniors struggling to meet rising living expenses need Social Security to be boosted and strengthened. The pandemic, runaway inflation and devastating stock market losses serve to remind us how vital a robust Social Security program is to workers, retirees, the disabled and their families. The clock is running down. The time for fair, just, and equitable action that safeguards Social Security’s financial stability is now,” adds Richtman.   

While acknowledging that the trust fund insolvency date may fluctuate from year to year, the urgent need to boost the program’s financing and benefits remains consistent, says Richtman. 

NCPSSM’s Richtman says, over the years, the GOP has opposed the expansion and strengthening of Social Security and has called for raising the retirement age, privatization, and more recently, ‘sunsetting’ Social Security and Medicare every five years.  He calls for passage of Rep. John Larson’s Social Security 2100: A Sacred Trust legislation that would extend trust fund solvency by requiring high wage earners to contribute their fair share through an adjustment in the payroll wage cap. 

A Washington Insider says that House Speaker’s Nancy Pelosi (D-CA) policy staff are concerned about the cost of Larson’s Social Security fix legislation and are seeking a CBO cost estimate. At press time this measure has more than 200 Democratic cosponsors in the House. The Congressional Asian Pacific American Caucus (CAPAC), Congressional Black Caucus (CBC), the Congressional Hispanic Caucus (CHC), the Task Force on Aging and Families, and the Congressional Progressive Caucus have all called on Pelosi to bring the bill to the House floor for a vote.

“Thanks to the American Rescue Plan, our economic recovery has strengthened both the Social Security and Medicare Hospital Insurance Trust Funds and improved financial projections for these vital programs. But to ensure that every American worker, senior, child, and person with disabilities receives the necessary and earned benefits provided by both Social Security and Medicare, we need to act. That’s why I am an original cosponsor of legislation like Social Security 2100: A Sacred Trust, to not only enhance benefits for seniors and some of our most vulnerable neighbors, but to also guarantee access to these programs for generations to come,” said Congressman David Cicilline, (D-RI).  

Congress can step in to financially strengthen the Social Security and Medicare programs. A message from the Social Security and Medicare Boards of Trustees suggest Congress pass legislation to reduce or eliminate the long-term financing shortfalls in both the Social Security and Medicare. “Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare,” say the Trustees.

Congress should look for “medium-term solvency” fixes to ensure that Social Security program can pay full benefits for several decades rather than for the full 75-year projection period, suggests Paul N. Van De Water, Senior Fellow at the Washington, DC-based Center for Budget and Policy Priorities, a nonprofit nonpartisan research organization and policy institute that conducts research on government policies and programs. “But shoring up the program’s financing for a substantial period of time is important for assuring both current and future beneficiaries that Social Security will be there for them in the years to come,” he says.

At a crossroad

NCPSSM’s Richtman believes Social Security’s future is now at a crossroads. “We can either cut benefits or expand benefits and pay for it by requiring the wealthiest to pay their fair share,” he says, calling on Congress to hold an up or down votes on Larson’s Social Security legislation.

Polling shows that voters support fixing Social Security and Medicare. Seniors may well go to the polls, sending a message with their vote that strengthening and expanding Social Security is important to them.   

For a copy of the 2022 Social Security Trustee Report, go to https://www.ssa.gov/OACT/TR/2022/tr2022.pdf. For a copy of the 2022 Medicare Trustee Report, go to https://www.cms.gov/files/document/2022-medicare-trustees-report.pdf

Seniors with student loans: AARP’s new online tool to manage debt

Published in RINewsToday on April 5, 2021

Over the years, AARP Public Policy Institute (PPI) has tracked the staggering amount of student loan debt that seniors are shouldering to help their children and grandchildren finance their higher education. Many people age 50 also take on student loan debt themselves, seeking more education at colleges and universities to sharpen up their skills to get a raise or a higher paying job.  

AARP national CEO, Ann Jenkins, in a July 3, 2019 blog posting, “Student Loan Debt is Crippling too Many Families,” urged Congress and state legislatures to increase public investment in colleges and universities. “The cost of attending a four-year college more than doubled, even after adjusting for inflation, as state and local funding for higher education per student has decreased,” she said, noting that family incomes haven’t come close to matching that increase.” 

Jenkins warned that the rising cost of student loan debt is “crippling too many families” and “threatens to crush the financial security of millions of Americans over age 50.” According to a PPI report, released May 2019, entitled “The Student Loan Debt Threat: An Intergenerational Problem,” cited by Jenkins in her blog article, Americans of all ages owed $1.5 trillion dollars in student loan debt as of Dec. 2018. Compare this to people ages 50 and older who owed 20 percent of this debt, or $289.5 billion of that total, up from $47.3 billion in 2004, she said, noting “that’s a fivefold increase since 2004.”

Most troubling, this 2019 PPI analysis, found that 25 percent of private student loan cosigners age 50 and older had to make a loan payment because the student borrower failed to do so.

The 2019 PPI analysis findings also indicated the obvious – that is, taking on student loan debt  can quickly deplete a senior’s retirement egg nest. The data revealed that many older student loan borrowers racked up debt by running a balance on a credit card (34 percent) and taking out a Parent PLUS loan, federal money borrowed by parents (26 percent). Other types of borrowing included taking out a home equity loan (12 percent), refinancing of their homes (10 percent), and taking out a loan against their retirement savings (8 percent).

Jenkins also noted that for seniors who defaulted in paying their monthly student loan payments, the federal government can recoup this money by taking a number of steps to collect, among them taking a portion of federal or state income tax refunds, withholding a percentage of Social Security retirement or disability benefits, or even garnishing some of the borrower’s wages.

Today, America’s seniors are still feeling the overwhelming financial weight of having to pay off student loan debt.  

Updated Student Loan Data Released 

Last week, AARP’s PPI released a new report updating data on older student loan borrowers. Like its 2019 analysis, the newly released data in the report, “Rising Student Loan Debt Continues to Burden Older Borrowers”, revealed that student loan debt is still a staggering problem across generations: Americans 50 and older held $336.1 billion, or 22 percent, of the $1.6 trillion in student loan debt in 2020. In 2004, older borrowers accounted for 10 percent of the $455.2 billion student loan debt.

“Student loan debt is becoming a burden for all generations, ensnaring more older adults and delaying or battering the retirement plans for many,” said Gary Koenig, AARP Vice President, Financial Security, in an AARP statement released on March 31, 2021. “Paying for higher education was never meant to last a lifetime.

That is why AARP is helping individuals take charge of their debt and financial security,” he said.

AARP’s newly released PPI analysis found that millions of borrowers – including as many as seven million individuals ages 50-plus – have had their payment suspension extended through September due to the pandemic. However, around a fifth of student loan debt – more than $300 billion – is not included in the current suspension.

Managing Your Student Loan Debt

To help individuals manage their student debt, AARP and Savi unveiled last week a new student loan repayment tool to help individuals identify the best payment options, with special features for the 50-plus population. The Savi Student Loan Repayment Tool provides a free, personalized assessment of student loan repayment options. It can also help individuals identify loan forgiveness opportunities based on employment, and assistance in preparing and filing paperwork.

“We’ve seen the generational impact of student loan debt, and we’re excited to work with AARP in helping older borrowers access immediate and long-term relief,” said Tobin Van Ostern, co-founder of Savi. “This is about changing the narrative and providing freedom from the burdens of student debt to those who need it most,” he notes.

“This new AARP resource provides a means for Rhode Islanders to form a clearer picture of student loan repayment that could help many clear up uncertainties and avoid potential additional costs,” said AARP Stated Director Kathleen Connell. “I urge older Rhode Islanders to get the Information they need, especially those whose retirement savings might be impacted.” 

Any adult with student loans may use the on-line tool at no cost, after registering at AARP.org/studentloans. AARP worked with Savi to customize the tool for older borrowers and includes: Options for dozens of national and state repayment and forgiveness programs; synchronized federal and private loans across all loan servicers easily with industry standard security; support from student loan experts; and access to free educational resources.

According to AARP’s statement announcing the new online tool, the Washington, DC – based aging advocacy group has worked with Savi to provide this resource to low-income older adults at no cost through the AARP Foundation. As older adults are the largest growing age group of student loan borrowers, AARP, and Savi are committed to helping them access the tools they need to begin tackling their student loan debt.

AARP’s statement makes it very clear that its collaboration with Savi does not involve or promote student loan refinancing of any.