Wednesday , 21 November 2018

START SAVING BIGTIME – NOW! Medicare Will Be Insolvent In 2026; Social Security By 2034

Medicare’s trust fund has just 8 more years of solvency until 2026, and Social Security will be exhausted in 2034, according to…projections by the trustees for the government programs. 

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…Social Security is made up of several funds; the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) are combined for the designation OASDI, while Medicare’s Hospital Insurance trust fund is designated HI.

If allowed to expire, beneficiaries would face an immediate reduction of around 20% in benefits.

The costs of Medicare and Social Security will increase substantially as a percentage of GDP through 2035 due to a sharp rise in beneficiaries as baby-boomers retire, and lower birth rates that have persisted since the baby boom resulting in slower growth of the labor force and GDP. 

  • Social Security’s annual cost as a percentage of GDP is projected to increase from 4.9% in 2018 to about 6.1% by 2038, then decline to 5.9% by 2052 before generally rising to 6.1% of GDP by 2092.
  • Medicare costs rise from 3.7% of GDP in 2018 to 5.6% of GDP by 2035 due mainly to the growth in the number of beneficiaries, and then increases further to 6.2% by 2092. The growth in health care cost per beneficiary becomes the larger factor later in the valuation period, particularly in Part D.

Over 62 million retirees, disabled workers, spouses and surviving children are tapping into Social Security benefits with an average monthly benefit of $1,294 for all beneficiaries. Medicare, meanwhile, provides health insurance to around 60 million people – most of whom are over the age of 65. 

The revised dates for Medicare’s demise raises the chances of a major fiscal battle facing Congress. The individual tax cuts implemented as part of the GOP tax overhaul are also set to expire at the end of 2025, meaning that lawmakers could have to navigate major changes in federal taxing and spending in short order, just as they did with the 2012 “fiscal cliff.”

Over a long time frame of 75 years, the hypothetical combined Social Security trust fund faces a shortfall of around $13.2 trillion, up from $12.5 trillion last yearClosing the gap would require an immediate hike in the payroll tax of 2.78% to 15.18% or an immediate reduction in current benefits of 17%, according to the Trustees. 

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One comment

  1. Ring the alarm as loud as you wish but the US govt has bailed out the banks and financial industry and GM in the 2008 crash to the tune of trillions of dollars!

    Before that the US spent trillions of dollars on war in Kuwait, Libya, Afghanistan, Iraq, Pakistan and billions on foreign military bases and foreign military aid.

    You will have a revolt unseen in decades if not centuries if the US govt tries austerity on domestic programs after accumulating a national debt that is 100% of GDP for foreign escapades and foreign adventures.

    YOU ARE LIKELY TO SEE GREATER RESTRICTIONS ON IMMIGRATION AS THE GOVT TRIES TO CUT OFF IMMIGRANTS ACCESS TO MEDICAID, MEDICARE, SOCIAL SECURITY DISABILITY, SOCIAL SECURITY, MUNICIPAL HOUSING FEDERAL FOOD STAMPS, FEDERAL STUDENT LOANS AND ALL OTHER FEDERAL EXPENSES IMMIGRANTS PATRONIZE…AND THE GOVT CHOOSES TO CUT GOVT PROGRAMS FOR NONVOTING CONSTITUENCIES.

    YOU ARE ALSO LIKELY TO SEE GREAT RESTRICTIONS ON WHO QUALIFIES FOR GOVT PROGRAMS.

    BUT MAKE NO MISTAKE ABOUT IT, THE FEDERAL GOVT WILL BAIL OUT SOCIAL SECURITY AND MEDICARE WITH LARLGER FEDERAL GRANTS EVEN IF THE REPUBLICANS DEVOLVE THE FEDERAL PROGRAMS TO THE STATES VIA BLOCK GRANTS. IF THAT DOES HAPPEN THERE WILL BE A REVOLT BOTH AGAINST THE FEDERAL GOVT FOR LARGER DOLLAR AMOUNT IN THE BLOCK GRANTS BUT ALSO A CIVIL WAR BETWEEN THE HIGH TAX DEMOCRATIC STATES THAT WANT TO RATION FEDERAL PROGRAMS FOR US CITIZENS SO THEY CAN EXTEND THEM TO IMMIGRANTS AND LOW TAX STATES THAT WANT ALL FEDERAL PROGRAMS FOR US CITIZENS AND ZERO OUT PRORAMS FOR IMMIGRANTS.