Last Updated Jun 5, 2018 5:30 PM EDT
The Social Security program's costs are expected to exceed its income this year, marking the first time that has happened since 1982 and forcing the U.S. government to dip into the retirement system's trust fund to pay benefits to participants. The program's trustees said the shortfall trend could worsen in the decades to come.
Indeed, the trustees of Social Security and Medicare forecast the program's reserves will be depleted by 2034, at which point it won't be able to pay full benefits on a timely basis. The report said that if the funds are depleted, the program could pay about three-quarters of benefits.
Because Social Security is a main source of income for older Americans, that scenario could crimp household budgets for seniors and even push some into poverty. About 23 percent of older married couples rely on Social Security as their main source of income, according to the program.
"Workers should panic, but not because of the most recent Trustee report," said Bankrate analyst Taylor Tepper. "Workers should panic because they aren't saving nearly enough for retirement."
Many younger generations believe that Social Security won't exist when they retire, although that's a fallacy, Tepper noted. If nothing changes, the program will still exit, but it will pay out lower benefits, as the trustee report predicts. That's important because younger workers should contact their lawmakers about fixing the program, not giving up on it, he said.
"You could change some of the formula about how much people get, you change the full retirement age, you change payroll taxes," he said. "There are a million solutions to it. There just has be political will."
That was echoed by the trustee report.
"Lawmakers have a broad continuum of policy options that would close or reduce Social Security's long-term financing shortfall," the report noted. Options include raising the maximum income cutoff for imposing Social Security taxes, currently $127,200.
This year, the program's cost will outstrip total income by $2 billion and non-interest income by $85 billion, the report said.
The report also forecasts that Medicare's giant trust fund for inpatient care won't be able to cover projected medical bills starting in 2026, three years earlier than previously expected.
President Donald Trump says he won't cut Social Security or Medicare, but hasn't offered a rescue plan for the long run.
Democrats want to expand the safety net by spending more on health care and education.
--With reporting by the Associated Press.