Social Security and Medicare to run short sooner than expected

Posted: May 14, 2011 in Economic Crisis, US News

Jeanne Sahadi
CNN Money
May 14, 2011

NEW YORK (CNNMoney) — Social Security and Medicare — the country’s two biggest entitlement programs — will run dry earlier than expected, according a report Friday from the programs’ trustees.

After the programs’ trust funds are exhausted, Social Security and Medicare will be taking in only enough money to pay a portion of promised benefits to retirees.

Combined, the cost of the programs represented 8.4% of the size of the nation’s economy last year — a figure that would jump to 11.8% by 2035.

The reason: The number of beneficiaries will explode as more Baby Boomers retire and lower birth rates will slow growth in the number of workers paying into the system. (How entitlements will eat up tax dollars)

Treasury Secretary Tim Geithner urged policymakers to take steps to shore up the two programs.

“We should not wait for the trust funds to be exhausted to make the reforms necessary to protect our current and future retirees,” he said. “Larger, more difficult adjustments will be necessary if we delay reform.”

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