The problem is now.
The only thing that changes when the "trust fund" runs dry is that then the current law says that current benefits can no longer be paid. But right the current shortfall is being paid by deficit spending.
The way that we're "redeeming" the trust fund is by converting trust fund debt into general debt.
I gotta hand it to the people that created the SSTF... They've snookered a LOT of smart people like you into thinking the problem is off someday in the future when it runs out.
I'm glad you pointed this out because it has been a pet peeve of mine for years. People talk about the Trust Fund as if it was invested in something but it isn't, it is all IOU's drawn on the Federal Government so it is the equivalent of me telling you that I have $100 in my right pocket when in reality what I have in my right pocket is $50 and a note that says that my left pocket owes my right pocket another $50.
It does exchange the Trust Fund for general debt. And the problem is NOW, and was 20 years ago. Obama claimed he could fix it easily, but didn't even try.
It's just one more rather massive issue our political structure makes nearly impossible to address. I can't conceive of a nonpainful remedy. Sure, you could add FICA to incomes over $400,000, but I don't think that really fixes it. And thus far, you get out in proportion to what you pay in, broadly speaking. That "fix" would mean they pay more in and get nothing for it.
I will get back what I put into it in about 5-6 years, not adjusted for inflation. Maybe it's ten years adjusted, maybe 15.
I'd look into raising the current tax on higher SS benefits for higher income earners.
Current cap on SS tax is $168,600 per year. There is no cap on Medicare and apparently people with very high earned income pay more.
I was going to say that Medicare is in much worse shape than SS but when I looked at the most recent Trustee report they claim that it isn't. Eventually I figured out that this is due to a neat accounting trick. Approximately 40% of Medicare benefits are paid from General Government Revenues and NOT from Medicare taxes nor the Medicare "trust fund" (which doesn't actually exist, see
@betarhoalphadelta 's point above).
Then there is a requirement that the Trustees issue a warning if the percentage of Medicare benefits paid from GG revenue is projected to exceed 45% within five years. They've been issuing the warning for a few years now and the 45% threshold is projected to be hit in 2027.
As of 2023 SS and Medicare costs are about 6% and 3% of GDP respectively but according to the Trustee report they are projected to get to about 6% EACH in ~20 years.
Measured as a percentage of covered payroll:
Social Security (Includes both OASI and DI - those are acronyms for Old Age and Survivor Income and Disability Income):
- 14.71% of covered payroll as of 2024 - increases every year until
- 18.60% of covered payroll projected in 2080 - then decreases to
- 18.12% of covered payroll projected in 2098
Medicare:
- 3.3% of covered payroll in 2024 - increases every year to
- 4.5% of covered payroll in 2045 - then the rate of increase slows but continues to grow to
- 4.69% of covered payroll in 2080
The current taxes are:
- 12.4% for SS - split 50/50 between employer and employee for those employed by others
- 2.90% for Medicare - split 50/50 between employer and employee for those employed by others
- 15.3% Total
Total Expenditures as a percentage of covered payroll range from:
- 18.01% for 2024 (14.71+3.3)
- 23.1% for 2080 (18.6+4.5)
So the current combined tax of 15.3% is low by somewhere between 5-8% (NOT 5-8% of the 15.3% but 5-8% on top of the 15.3 which would be an increase of 33-52%)
