WASHINGTON (AP) — The nation's retirement programs will not run out of cash as early as previously thought, reflecting the vibrant health of the U.S. economy through much of last year, Social Security and Medicare trustees said Monday.
The projected insolvency date of the Medicare trust fund was delayed by four years to 2029, and insolvency of the Social Security fund was put off by one year to 2038, the trustees' annual report said.
It marked the fourth year in a row that the retirement programs gained new years of life, reflecting the sizzling state of the nation's economy during the first half of last year. But the economy began to weaken at the end of last year and is now sputtering.
This year's improvement in the financial outlook of the retirement programs wasn't as dramatic as last year's projections.
Medicare, the health insurance program for the elderly and the disabled, had been projected last year to run out of cash in 2025, 10 years later than earlier forecast. That was moved to 2029 in the new estimate.
Social Security, the largest federal benefit program, had been expected to exhaust its trust funds in 2037, a three-year extension, in last year's report. The new date now is 2038.
The Bush administration said the programs, which now run huge surpluses, still face financial challenges as the aging baby boom generation begins to retire in the next decade.
The trustees paid particular attention to Medicare, whose spending is ultimately expected to exceed the costs of Social Security.
"The Medicare program as a whole presents financial challenges that will require integrated and comprehensive solutions," said Treasury Secretary Paul O'Neill, who sits on the board of trustees.
The additional four years added to Medicare's life in this report shouldn't been used as an "excuse for complacency," O'Neill said.
The projections come as Republicans in Congress and liberal Democrats battle over expanding the Medicare program, including potentially costly but politically popular prescription drug benefits.
Bush had called for overhauling the program to include competition from private health plans before extending benefits to all participants. Democrats prefer coverage for all participants with incremental reforms to ensure the program's future ability to handle the baby boom generation.