Social Security won’t be able to pay full benefits by 2034

(CNN) — Social Security will have to cut benefits by 2034 if Congress does nothing to address the program’s long-term funding shortfall, according to an annual report released Tuesday by the Social Security and Medicare trustees.

That’s one year earlier than reported last year. By that time, the combined trust funds for Social Security will be depleted and will be able to pay only 78% in promised benefits to retirees and disabled beneficiaries.

The Covid-19 pandemic and economic recession are to blame for moving up the depletion rate by a year, driven by the big drop in employment and resulting decline in revenue from payroll taxes. But it remains unclear what the long-term effects of the pandemic will be on the funds and the trustees will continue to monitor developments.

The projections for Medicare are roughly on par with last year’s report.

The trust fund for Medicare Part A, which covers hospital and nursing home costs for seniors, will be depleted by 2026, the same year as reported last year. At that point the program would only be able to pay out 91% of promised benefits.

Medicare Part B, which helps seniors pay for doctor visits and outpatient care, as well as Part D, which covers prescription drug benefits, are “adequately financed into the indefinite future,” the report said. That’s because the law requires automatic financing for them.