Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research may determine where and how companies appear. Learn more about how we make money.

In an election year that has voters and candidates debating whether Social Security benefits can or should be expanded, the annual report from the program's trustees reminds us that mere solvency is the real issue. Yes, baby boomers are still retiring and, yes, money to pay these bedrock retirement benefits is still running short.

Even shorter, it turns out, in the case of Medicare’s hospital insurance trust fund (Part A), which will be depleted in 2028—two years earlier than projected in the trustees report last July. The combined trust funds that help pay old age and disability benefits are likely to run out by 2034, the same projection from a year ago.

There is some good news in the report: A year after Social Security benefits held steady due to falling energy prices and overall deflation (as the government measures it for cost of living adjustments), the trustees anticipate benefits will rise 0.2% at yearend. Of course, that will be just enough to offset inflation.

While insolvency looms, the situation is hardly dire. For one thing, the Medicare hospital insurance fund’s projected date of insolvency has been pushed out by more than a decade since the advent of the Affordable Care Act, known as Obamacare. Even if the trust fund runs dry and no other changes are made, it would be able to pay 87% of scheduled benefits. Medicare Part B, which pays for doctor visits and outpatient costs, and Part D for prescription drugs, will remain fully funded by law—though premiums may rise.

Should the Social Security trust fund run dry and no other changes be made, Social Security recipients would get an immediate cut to about 75% of scheduled benefits. There is still ample time to shore up the programs, and with more than a decade to do so, candidates in this election year have been suggesting that rather than cut benefits they may actually be able to expand them.

The populist candidate Bernie Sanders has driven this conversation. But Hillary Clinton has said she will not raise the age for eligibility or cut middle class benefits. Donald Trump has said he will not curb spending on Medicare or Social Security.

A quarter of Americans past age 65 rely on Social Security for at least 90% of their income. Some 60 million collected Social Security retirement or disability benefits last year, and 55 million were covered under Medicare. It is nearly unthinkable to let these programs go under.

The government spent $648 billion on Medicare last year, equal to 3.6% of gross domestic product. That is projected to grow to 5.6% by 2040 as the population ages.

Just late last year, a budget deal included provisions to ease huge scheduled hikes in monthly premiums and annual deductibles for Part B of Medicare and prevent big cuts in disability benefits. Such tweaks are relatively common. But Congress has shown a willingness to take bigger measures as well. In 1983, when the program faced a financial crisis, Congress cut spending, and raised both payroll taxes (which fund both Social Security and Medicare) and the eligibility age. Such measures are at odds with the current political discourse. But the elections will soon pass and perhaps then we can get back to dealing with reality.