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Higher Interest rates , effect on the SS and Medicare Trust Funds
Old 10-22-2018, 02:27 AM   #1
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Higher Interest rates , effect on the SS and Medicare Trust Funds

IIRC , both the Social Security and Medicare Trust Funds are invested exclusively in US Gov. Debt obligations.

For those who know , will the recent interest rate increases push out depletion of these trust funds significantly ?
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Old 10-22-2018, 06:10 AM   #2
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Rising interest rates are often accompanied by rising cost of living so higher payouts for Medicare and larger COLAs for SS - witness this year's 2.8%. So I would guess a wash.
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Old 10-22-2018, 07:44 AM   #3
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Originally Posted by donheff View Post
Rising interest rates are often accompanied by rising cost of living so higher payouts for Medicare and larger COLAs for SS - witness this year's 2.8%. So I would guess a wash.
Note that in this case wages are going up at the same time the cost of living and COLAs are going up. So, more current revenue.

OTOH, there is an annual gap, presumably the dollar amount of the gap goes up.

And, I believe the interest rate is the average rate on all outstanding federal debt, not the rate on new issues. So interest rates don't move all that fast.

Here's a table of short term projections: https://www.ssa.gov/oact/TR/2018/IV_A_SRest.html#90333

If I had the time this morning, I'd try some back-of-the-envelope calculations.
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Old 10-22-2018, 09:33 AM   #4
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I personally have more of a concern about the effect of rising interest rates on our national debt.
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Old 10-22-2018, 09:38 AM   #5
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Originally Posted by Lakewood90712 View Post
IIRC , both the Social Security and Medicare Trust Funds are invested exclusively in US Gov. Debt obligations.

For those who know , will the recent interest rate increases push out depletion of these trust funds significantly ?
If you've listened to Mitch McConnell the past few days, it really doesn't matter, as he is looking to reduce Social Security and Medicare payouts today.
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