June 19, 2024

Economix: Good News for Grandpa

Death panels notwithstanding, Grandpa gets to live a little longer.

The Medicare trust fund will probably be exhausted in 2024, five years earlier than previously estimated, according to an annual report from the trustees of the Social Security and Medicare programs. Likewise the Social Security depletion date was moved up to 2036, from 2037.

Why? The revisions are partly due to a lackluster recovery, which leaves fewer people paying the payroll taxes that finance Medicare and Social Security. But they also have to do with changing expectations about the longevity of today’s elderly, and therefore how long they’ll be receiving these benefits.

As Dean Baker notes, last year’s report forecast that men who turned age 65 in 2010 would live, on average, and additional 18.1 years. But the new forecast gives this group an extra six months, to 18.6 years. Life expectancy for women at age 65 in 2010 has likewise been lengthened, to 20.7 years from 20.4 years, an extension of about three months and 18 days.

Predicted lifetimes were also extended for future old people, although the extension that today’s old people get was bigger.

“While the assumption of longer life expectancies does raise the cost of Social Security and Medicare, the projected shortfalls in both programs are still relatively modest,” Mr. Baker writes. “Measured as a share of G.D.P., the combined shortfalls are roughly half the increase in the share of G.D.P. devoted to military spending between 2000 and 2011.”

Article source: http://feeds.nytimes.com/click.phdo?i=fd2002089df5a50479b733221715daef

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