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Pandemic recovery bought Social Security fund extra time

Yahoo Finance senior columnist Kerry Hannon joins the Live show to detail how the period of pandemic recovery has extended Social Security funds to pay out benefits until 2034.

Video Transcript

DAVE BRIGGS: The Social Security Board of Trustees has just released their annual report detailing the financial status of US Social Security and Medicare programs. Yahoo Finance senior columnist Kerry Hannon is here to break it down for us. Kerry, good to see you. It's actually good news for a change? Is that correct?

KERRY HANNON: Well, let's say a little bit of good news.

DAVE BRIGGS: OK, we'll take it.

KERRY HANNON: The recovery from the pandemic was more robust and faster and stronger than anticipated last year. So what that meant is that there were more people working. The Social Security taxes were there. So that's good news. So, in a sense, they were able to push back one year the short fall that they anticipate coming in the surplus fund for Social Security. But both Social Security and Medicare face really significant long-term financing challenges. The good news from last year being that the disability insurance is still going to be there. They see no shortfall there whatsoever. But yes, we have these very serious implications ahead.

So, you know, what they're saying is the costs are going to continue to grow faster than the GDP through the mid-2030s. So, in essence, we're just a little more than a decade away from the main trust fund being exhausted. So, in essence, there's a little more time. We bought ourselves some time because the economy was a bit stronger.

But the sound-- it's very clear that policymakers have got to make some changes here. They need to act because it takes time for these things to roll out. So reforms need to be put into place. But the people who are so panicked that they're never going to get Social Security are mistaken. In fact, they will still receive Social Security, but we need to make some changes in order to have that surplus.

SEANA SMITH: So, Kerry, that begs the question then, if we don't see changes, I guess, then, what happens after 2034, after we get to the 2030s? How worried should we potentially be?

KERRY HANNON: Yeah, you know, it's so difficult to know for sure. But the experts I talked to this afternoon were simply saying that, yes, in fact, we really have to get going on something. But the number that everyone throws out is that it'll be around 77% of what the current scheduled amount is.

So it's not that it's going away completely. You're not going to get anything, but it will be reduced if something does not get done in order to kind of make some changes here. Because with an aging population, this is something that is a very real fact that you cannot escape that there aren't as many people that are going to be in the workplace in order to support that aging population.

SEANA SMITH: All right, Kerry Hannon, thanks, as always, for hopping on here.