The cost of Social Security, the US public retirement system, will outstrip its revenues next year for the first time in nearly four decades, its trustees say (Eva HAMBACH)

Washington (AFP) – The cost of Social Security, the US public retirement system, will outstrip its revenues next year for the first time in nearly four decades, its trustees said Monday.

This will begin eroding the roughly $3 trillion trust fund for Social Security, putting it on track to be depleted by 2035 — a year later than a prior forecast, the board of trustees said in an annual report.

More than 60 million Americans currently depend on the Depression-era program for retirement and disability benefits.

But demographic shifts, including an aging US population, are driving up the cost of the bedrock US retirement system, leaving it with increasingly shaky finances.

In their annual report, the trustees called on Congress to develop fixes “in a timely way” so that changes can be phased in gradually, allowing workers to adjust.

The slight improvement in the timeline for Social Security finances reflects last year’s stronger economic and job growth and gains from “Obamacare,” the healthcare system put in place by Democratic lawmakers in 2010, Stephen Goss, Social Security’s chief actuary, told reporters.

A sharp drop in applications and benefit payouts for disabilities helped improve the outlook for a component disability fund, which is now expected to be solvent until 2052 — 20 years longer than a prior forecast.

Low unemployment, wider health insurance coverage and the spread of jobs less prone to workplace accidents means fewer people are applying for disability coverage, officials said.

But matters have not improved for the trust fund supporting Medicare and Medicaid which provide health insurance for the oldest and poorest Americans respectively.

It will be exhausted in seven years at the current rate, according to the report, matching last year’s forecast.

Health insurance costs as a share of GDP should rise from 3.7 percent last year to 5.9 percent in 2038.

Cutting costs by 19 percent or raising employer and worker contributions to 3.8 percent from 2.9 percent would help save Medicare from insolvency, according to Paul Spitalnic, chief actuary for the Centers for Medicare and Medicaid Services.

Social Security and Medicare (which covers Americans 65 and older) are the two largest expenses in the federal budget, representing about 45 percent of all outlays not including debt service.

About 176 million American workers contribute toward the system’s expenses while 52.7 million Americans receive retirement benefits and 59.9 million are covered by Medicare.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.