At Mirus Financial Partners, we stay on top of policy changes that may affect your financial future. One of the most important of these is the Annual Trustees Report, which gives Congress and the public a detailed look at the financial health of Social Security and Medicare.

Released on June 18, 2025, this year's Trustees Reports confirm that both programs continue to face long-term funding challenges. The reports are prepared by the Boards of Trustees for each program and include projections on income, expenses, and when each trust fund might be depleted if no action is taken.

Why does this matter? Social Security and Medicare are key parts of most Americans’ retirement plans. Understanding the status of these programs can help you plan more effectively, especially if changes to benefits, taxes, or eligibility are on the horizon.

The good news is that these programs are not going away. But adjustments will likely be needed to maintain their solvency and sustainability for future generations.

Why the Trust Funds Are Under Pressure

The core issue is demographic. Fewer workers are supporting more retirees. In 1960, there were 5.1 workers contributing for every Social Security recipient. In 2025, there are just 2.7 workers per retiree. That ratio is expected to fall even further to 2.2 by 2045.

At the same time, people are living longer and collecting benefits for more years. Fewer payroll contributions and a longer retirement phase are straining the system.

Social Security Projections

Social Security has two trust funds. The Old-Age and Survivors Insurance (OASI) Trust Fund is projected to run short in 2033. At that point, the program could still pay 77% of scheduled benefits from ongoing revenue.

The Disability Insurance (DI) Trust Fund is on stronger footing and isn’t projected to run out within the 75-year projection period.

If we combine both programs (a hypothetical scenario), the combined reserves would be depleted by 2034. At that time, incoming revenue could pay around 81% of scheduled benefits.

The recent Social Security Fairness Act of 2023, which repealed the Windfall Elimination Provision and Government Pension Offset, has increased benefits for certain retirees. While helpful to some, it adds additional pressure to the system’s finances.

Medicare Projections

Medicare’s Hospital Insurance (HI) Trust Fund, which supports Part A (hospital coverage), is expected to remain solvent through 2027. After that, it’s projected to run short by 2033—three years earlier than last year’s estimate. After depletion, the trust fund would be able to pay about 89% of its costs.

Medicare Parts B and D (doctor visits and prescription drugs) are funded differently through premiums and general tax revenue. These funds are not expected to run out, but overall Medicare costs are projected to rise faster than the economy.

A new law, the One Big Beautiful Bill Act, signed on July 4, 2025, may also impact funding. It increased the senior tax deduction, which could lower income tax revenue from Social Security benefits. One estimate suggests this change might move up the depletion dates for both the OASI and HI trust funds to 2032.

What Might Change

To restore long-term balance, Congress may need to consider increasing the payroll tax rate (currently 12.4%), raising the cap on taxable earnings (currently $176,100), adjusting the full retirement age, modifying the benefit formula or cost-of-living adjustments, or changing how benefits are taxed for higher-income individuals.

For Medicare, a combination of spending adjustments, tax changes, or reforms in service delivery may be required to close the gap.

What You Can Do Now

While these programs are not vanishing, some level of reform is likely in the coming years. Historically, most changes have impacted future beneficiaries rather than those already receiving benefits.

Still, this is a good reminder that relying solely on government programs for retirement may not be enough. Now is the time to review your retirement strategy. A well-structured savings plan and diversified income sources can help you maintain control and confidence in your financial future—no matter what changes lie ahead.

Want to learn more? You can view the full reports at www.ssa.gov for Social Security and www.cms.gov for Medicare. Or feel free to reach out to the team at Mirus Financial Partners. We’re here to help you plan with clarity, flexibility, and peace of mind.

Projections are based on current laws and economic conditions and may change. Sources include the 2025 Trustees Reports, the Committee for a Responsible Federal Budget, and the National Institute on Retirement Security.