Social Security And Medicare Will Be Insolvent Even Sooner Than Predicted
If you plan on retiring after 2037, you'd better get really serious about saving now. It might not hurt to also take a vow of poverty; that way you'll feel like it's your decision to live off of cardboard and dumpster fruit in your sixties.
Why are we being so pessimistic? Because the government says Social Security benefits and Medicare coverage are going to run out even sooner than they thought.
Trustees of the two programs said Tuesday that Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner.
The trustees said Medicare was in even worse shape. They said that the trust fund for hospital expenses will pay out more in benefits than it collects this year and will be insolvent by 2017, two years earlier than the date projected in last year's report.
If you don't know where to start, try browsing the posts under our "retirement" tag for some great stories and tips to get you pointed in the right direction.
"Social Security and Medicare Finances Worsen " [Associated Press via the New York Times]
(Photo: rileyroxx)
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Comments:
What's the solution? Oh, I know-- blow out the deficit, today, on everything BUT solving the entitlement crisis!
Maybe we can cut another $100 million out of something, that should help.
Don't worry, Obama and the Democrats just haven't gotten around to fixing it yet. It's just a little further down on the list.
I think I'm just going to have little SteveDave push me out on a ice flow when I cease to be productive. Well, less productive than I am now.
SO what happens when there is no $'s?? Perhaps that is why it is so hard to locate ammo! After being forced to pay into Social Security for decades then when it is time to get your money, the Gov, says "sorry your SOL!" I imagine there's going to be a revolution!
Remind me again why the government can legally require me to pay into a system that they know won't be there when I am eligible for benefits?
This is the time to start campaigning for rules governing ADA compliant and easily accessible dumpsters.
If SS & Medicare are going to be totally useless, I would like to opt out of paying taxes on these two things on my paychecks every 2 weeks. I need that money! That would be soooo nice.
They'll just print more money.
@TheTriStatesBestSide_GitEmSteveDave: I'm going to sell off organs and limbs piece by piece. That should keep me with enough cash to pay for basics, and as an added bonus there will be less of me to bury when I die so I can buy a smaller casket. $avings!!!
@dangergirljones: +1. They've known for years, but at this point the ready admission of how much of a farce it is just makes me angry.
I'm not so naive to think there's a dollar to dollar correlation between what someone puts in and what they get out, but isn't this along the same lines of paying into an escrow fund and having the bank throw up their hands when it's time to pay your property tax? The difference here is that you're paying into that escrow fund under penalty of jail and suing is going to be a LOT harder.
i'm guessing this'll be fixed with an increase in the payroll taxes. politicians don't have the balls to actually limit benefits because too many seniors vote. i'm paying $700 a month for soc sec and medicare, if i were allowed to save that myself i wouldn't need a dime from the gov't when i retire. so many people complain about income tax, sales tax, etc, but rarely about the grossly incompetent way their payroll taxes are spent.
@dangergirljones: Because the government can pull the Ponzi scheme, and screw us young workers....awesome
You are greatly underestimating how apathetic the majority of people in this country are or greatly overestimating the number of them that actually understand what the problem is.
SS and medicare already cost me more per cheque than my health insurance, 401K, and federal income tax. I want out. I won't reture for another 40+ years. :(
... or, you know, we could just go back to taxing the rich more?
i'll never understand the compulsion of the poor to defend the right of the rich to be rich. if they had to pay 90% tax on every dollar earned over, say, $5 mil a year, i bet this would be a non-issue and our gov't wouldn't have a problem.
Just a friendly reminder that certain professions (like pastors) don't pay into Social Security and are instead free to invest their money however they see fit.
Just throwing that out there.
@dangergirljones:
>why the government can legally require me to pay into a
>system that they know won't be there
They're the ones with the guns.
HINT: You want to be the one holding the gun.
Really? I expect more from Consumerist than to promote this sort of thing. Have you noticed that *every single time* they issue the report the media starts hyping "Social Security will be bankrupt in 20 years"? Ever wonder why that 20 year timeline never gets any shorter? Because the media is just repeating BS propaganda from the Cato Institute. Slate, Salon, and various economists have all recently debunked this nonsense once again. Do 30 seconds of research.
@dangergirljones: Because, actually, it will be there. There's nothing wrong with Social Security a little tweaking can't fix. They did this in the early 1980s. Medicare is the big problem, hence the push for health care reform this year.
@Daveinva: Cut? What is that?
They'll get another $100 million alright, just out of "someone" instead of something.
@katieoh: Because we can fix the problems by just throwing MORE money at it rather then fundamental changes in the system or changing the way it operates?
@TheTriStatesBestSide_GitEmSteveDave: Due to "Global Warming" your ice floe will need to be made of styrofoam...or a bunch of those aquafina bottles.
Put Congress on the same social security system as the hoi polloi and watch how fast they fix it. Unfortunately, it's more likely though that they'll just re-write the rules so that those of us who've been saving for this eventuality will be declared "rich" and have our retirement assets taxed into nothingness.
Social Security is a huge waste of my money. I would glady opt out of paying now and agree to never try and collect a dime in the future. I could do so much better investing that money for the future then the government can.
@katieoh:
i'll never understand the compulsion of the poor to defend the right of the rich to be rich
This is a fairly popular topic. You should do some research to try to understand the opposing viewpoints on it. Chances are that if you did you'd be far ahead of your classmates espousing the same views, intellectually speaking.
Class Action Lawsuit here we come
And my husband wonders why I want six kids. Hellooooo, it's not like the 401k is doing so hot either! Sad when raising lots of kids to pay for my nursing home is the wisest retirement investment available.
This is fear-mongering at its best. You can do all sorts of interesting math calculations to try and upset people, but it only works if you assume that the status quo will be maintained for the next 28 years. Clearly, there are many ways in which the problem can be dealt with between now and then from reducing benefits, means testing for retirees, increased taxation, or simply other changes in the budget to funnel more money into Social Security and less into other programs/expenses.
Social Security is not only a political sacred cow, but also something that the government will have no choice but to deal with as time goes by as Americans will not stand for being denied benefits from a program they paid into all their lives. They're not going to leave it all crumble and face the social and political upheaval that would ensue.
However, this is not going to be Obama's problem. It wasn't created on his watch and it won't be fixed on it either. Let's not blame him or lay even more financial difficulty at his feet given that the current situation (you know, the huge recession) has to be dealt with first.
It could have been worse though. The Social Security system could have been semi-privatized and tied into the stock market as Bush had wanted. :-p
The world's ending in 2012 anyway, so no need to worry about it.
@darkjedi26: Really? So, when you're retired and your investments fall ~40-50% like they have in the past year, how will you be doing? Would you like to go back to work full time? Wouldn't it be nice to have some income you could depend on to help you get by? Say, something secure?
@revmatty: I don't think that Giethner works for the Cato Institute, and he's the one saying it is going to run out of money.
Granted, he couldn't figure out his own taxes...so take with a grain of salt.
@ShariC: You're troubling use of facts and logic may cause many libertarian/conservative Consumerist commenters' heads to explode.
@Ratty: People seem to forget that, only 40 years ago, our tax schedule looked much like the tax schedules of other (arguably better-off with regards to social services) first-world nations of today.
It's not class warfare BS when it's completely and historically correct. The rich used to be taxed far, far more than they are now, and while they still contribute the majority of tax revenues there is little-to-no reason to not return to a more aggressive tax schedule - especially if we want to successfully fund social security, healthcare, and education, instead of just defense over the long term.
We're pissing away our economy at all expense, all to increase our defense funding. It's really quite ludicrous, and yet it does get defended by great swaths of voters every step of the way.
@redskull: I realize a 3rd party President seems a little radical, but it's not going to be the end of the world. In fact, I think it'll be good for pretty much everyone that isn't on the payroll for the donkeys and the elephants.
Oh, the way to get around this is to get a government job. Then you can retire after only 30 years and live comfortably with pension and health benefits. Even the government doesn't believe in SS.
So, basically, I need to just off myself when I retire. Great.
Hmmm. What are they wasting money on that could be funneled into this fund?
ABOUT A GAZILLION THINGS!!!!!!