At the end of last year, 43.8 million people received Social Security retirement and survivors’ benefits; 10.2 million people received disability payments; 47.5 million people were covered by Medicare.
Medicare Trust Fund will be Exhausted 5 Years Earlier than Previously Thought
Medicare is our senior citizen national health care plan for those aged 65 and older. This projection puts pressure on Congress and the Obama administration to deal with the program's long-term financial well-being.
Hospital Stay Funding - Gone by 2024
The Social Security and Medicare board of trustees say the Medicare program that covers hospital stays will be exhausted in 2024.
The shortfall is due to higher projected health-care costs and lower payroll taxes.
Social Security - Exhausted in 2036
If no changes are made, there will be problems. The projection is that Social Security reserves will be exhausted in 2036, one year earlier than previously estimated.
That’s caused mostly by people living longer, but also because there are lower levels of immigration and weaker earnings due to high unemployment. So it’s fair to say that it’s time for some active reassessment of these programs.
And it will make a difference in taking social security now rather than waiting.
Taking social security at age 62 will reduce your benefit by about 25 percent from the FRA, or if you want until your FRA age. That’s not good if you live longer.
Here are some of the key reasons why these social programs need attention:
Large Numbers of “Baby Boomers” Retiring
A large number of baby boomers are retiring. Currently, 43 million people receive social security benefits, and that group will grow.
Starting back in 2008, 77 million baby boomers began retiring; that trend will continue over the next 18 years.
Fewer Workers Supporting Retirees’ Benefits
Fewer workers are paying into and financially supporting benefits for an expanding retiree population.
Social security is a pay-as-you go system. Back in 1950 there were 16 workers were paying into the system for each retiree.
Today, that ratio is about 3.3 workers supporting each retiree.
That number is expected to drop to two workers in the next 40 years.
Longer Life Expectancies
Adding to the problem are extended life expectancies.
Back in 1935, when social security began, life expectancy of a 65-year-old was 12.5 years.
Currently, a male at age 65 has an extended life expectancy of 17.5 years. In the end, this means more payments to an expanding retiring population.
So it’s time to get busy to figure out how to continue these promised benefits, given the reality of population demographics.
Some Changes that Could Happen
- An increase in taxes would increase funding.
- A reduction in benefits, for example, a delay of FRA to age 70
- Qualifying for partial benefits,
- Or a combination of these