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Tuesday, April 24, 2012

Counting on Social Security and Medicare for all of your financial needs could be the worst mistake you'll ever make.


More Bad News on Social Security and Medicare Trust Funds

Posted 6:00AM 04/24/12Posted under: RetirementEconomy



For years, people have worried about whether Social Security and Medicare would be around when they needed the benefits that those two programs provide. On Monday, worriers got bad news: The programs are closer to running out of money.

The government released the latest versions of the annual Social Security and Medicare Trustees Reports on Monday, and the results were troubling:
  • The combined trust fund that holds funding reserves for the overall Social Security program is now expected to run out of money in 2033 -- three years earlier than trustees expected last year.
  • The news for Medicare is even more dire. Its trust fund will run out of money in 2024 under current projections. That's the same as it was last year, but fully five years earlier than estimates from two years ago.
  • Breaking down Social Security into its component parts, the retirement part of the program will use up its trust fund in 2035. But for its disability program, the news is worse still -- its trust fund will go dry in 2016, two years earlier than last year's prediction.
The reduction in Social Security payroll taxes in 2011 and 2012 has led to steep declines in payroll taxes going to the Social Security trust fund. However, the legislation creating the tax cuts provided for reimbursements to the trust fund for any lost revenue, and it appears that the Trustees Reports treat those reimbursements as money available to the trust fund.
What's Next

As DailyFinance contributor Chuck Saletta has detailed previously, demographics are largely to blame for the current crisis. As baby boomers approach retirement age, there are fewer workers in the younger generations to pay taxes to support their monthly benefits. Unless something's done to address the problem, the trustees expect that Social Security will have to cut benefits by about a quarter across the board when the trust fund assets run out.
Medicare's problems are even more potentially catastrophic for retirees. Social Security may provide regular income, but Medicare pays a big chunk of the huge unexpected expenses that medical problems bring to many retirees. Any reduction in benefits to Medicare would leave retirees dangerously exposed to financial disaster.

Regardless of what action lawmakers take to address the problem, the Trustees Reports emphasize how important it is for you to have your own retirement nest egg. Counting on Social Security and Medicare for all of your financial needs could be the worst mistake you'll ever make.

69 comments:

  1. Step One:

    Stop the stupid wars.

    ReplyDelete
  2. Have you ever heard the words "misinformation" or "propaganda"? Uncomfortable news reports are concealed or distorted.

    ReplyDelete
  3. Stop the stupid wars.


    lol


    Funny.

    ReplyDelete
  4. I like smart wars....

    Panama, Libya, Yemen, Sudan smart or stupid?

    Iraq, Kuwait, Lebanon, Afghanistan smart or stupid?

    North Korea, Pakistan? Smart or Stupid?

    Iran, Syria Smart or Stupid?

    ReplyDelete
    Replies
    1. .

      War is never smart only necessary at times.


      Kuwait and Afghanistan? Necessary.

      All the rest? Unnecessary (and stupid).

      .

      Delete
    2. Stupid, Stupid, Stupid
      Stupid, Necessary, Stupid, Stupid
      Necessary, Missed the war we had with Pakistan, must have been resting.
      Idiotic if it happens, Stupid if it happens.

      Delete
  5. Let's see if America just would come home and let the world deal with it'sself...

    Quit the UN, quit NATO, withdraw from all our bases overseas...

    Hmmm, that still would not solve Social Security, Medicaid or other entitlement abuses which make up 66% of our debt.

    ReplyDelete
    Replies
    1. .

      Talk of entitlements is silly. There are no entitlements. The M/M and SS 'reserves' are mere slips of paper that say IOU. About 81% of the budget is discretionary; the other 19% is made up of mandatory expenditures and interest charges.

      Other than that 19% everything else is budgeted by the will of Congess including the military and so-called entitlements. They are funded by political decisions involving the allocation of resources based on political considerations.

      A cynical person might say that those decisions will be based on whatever it takes to get the pols elected and to keep them elected.

      Medicare/Medicaid and SS currently take up about 43% of the budget. Their taxes currently pay for about 36% of the budget. To bring them in line, it would obviously require raising taxes on them or cutting benefits in one way or another (I could name a half a dozen ways that have been talked about, changing the COL basis, extending eligibility age, etc.)

      However, while some argue that is the 'fair' thing to do, that statement is naive. Fair is a subjective word. Politicians will only do what's 'fair' if it is also politically acceptable. Politicians could fix Medicare tomarrow by setting the eligibility age at 90. The won't do it because the following day they would be on their way out of office.

      .

      Delete
    2. The won't do it because the following day they would be on their way out of office.

      Or well beyond the reach of Medicare.

      Delete
  6. Let's give a payroll tax cut to the masses so they can afford a few extra brews and a couple of gallons of petro.

    If we all are broke then our collective poorness is something to be celebrated!

    Soylent Green is HUMAN....

    ReplyDelete
    Replies
    1. .

      A good point.

      On an intuitive basis, the payroll tax cuts would seem to make sense, putting more money back into the economy to spur growth. However, the studies I have seen don't seem to prove that point.

      Likewise, the Bush tax cuts and their extensions have not seemed to help spur job creation and past history shows that allowing tax breaks for repatriation of corporate foreign profits has done nothing to help employment here.

      Our tax system is truly screwed up.

      .

      Delete
  7. The USA is becoming the USSA.

    5 year plans, redistribution, 1% against the 99%!

    All hail the great Father!

    ReplyDelete
    Replies
    1. .

      The US today is getting to look more and more like the world of 1984 but probably not in the way you think.

      .

      Delete
  8. How about that quantitative easing?

    ReplyDelete
    Replies
    1. .

      It appeared a good idea in the beginning, probably a necessary thing; but it got to be too big and has gone on way too long.

      .

      Delete
  9. The Soc. Sec. Trust fund has about $2.5 Trillion in it. That's the kind of "crisis" I can live with.

    Maybe we'll have to raise Romney's tax rate to 16%.

    ReplyDelete
  10. Die early.

    Avoid the fates.

    bob

    There are so many anons now I am going back to doing the hard work of typing my name.

    ReplyDelete
    Replies
    1. Rufus pays every month, he said.

      Rufus is the 1%.

      You'd think he'd have better sense than to vote Kenyan/muzzie/commie


      bob

      Delete
    2. A terrorist wrote Obama's autobiography, because he can't write himself.

      Ayers, who killed a cop with a bomb. He and his nifty sweetie Bernadine.

      Ayers said of himself, GUILTY AS HELL AND FREE AS A BIRD.

      And Ruf's gonna vote for the man.

      This country has lost its mind.


      bob

      Delete
    3. Look what I found -

      POLLS R POO

      only numbers that matter are incomes

      Median income is down significantly since 2009

      Barack is Dunzo

      corujodp on April 23, 2012 at 10:28 PM


      Must be a subsidiary of Souls R Poo

      Which is a subsidiary of Souls R Us.

      bob

      Delete
    4. .

      CNBC reports that Souls-R-Us and its subsidiaries have weathered the financial crisis quite nicely in part due to the unique brand of goods and services it offers.


      .

      Delete
  11. Case-Schiller Home Price Index Still Falling


    The truly amazing thing is that we've, so far, avoided a full-blown Depression. The Depression-inducing shock of 1929 was much, much less than what we've gone through this time.

    ReplyDelete
  12. New Fashion Wrinkle: Stylishly Hiding the Gun

    http://www.nytimes.com/2012/04/24/us/fashion-statement-is-clear-the-gun-isnt.html?hp

    ReplyDelete
  13. Max,

    To follow up on our discussion of yesterday:

    Yes, derivatives are a problem and, yes, the concentration of banking to just a few entities is a problem (to put it mildly) and the lack of regulation of those entities coupled with the GOP resistance to regulation is a problem it is still a mistake to conflate the 'value' of outstanding derivative contracts with debt.

    For example, (all numbers pulled out of my as.....er hat):

    Company A may purchase for 100$ insurance from Company B against the US government default on 1 Million dollars of US government bonds in the next 12 months. Value of contract 1 Million 100 dollars. Add to that the fact that there is no exchange for derivative contracts and an opacity in reporting the statement '700 trillion in derivative debt' is misleading.

    ReplyDelete
    Replies
    1. Thought I had conceded the vocabulary point way back (in second maybe third reply) when I said "obligations" as in contractual obligations.

      Delete
  14. Didn't this blog used to post a few pictures of some fine Women once in awhile? What happened to the babes?

    ReplyDelete
    Replies
    1. We got to many tut-tuts from the blue noses. War is in, babes are out.

      Delete
  15. Damned good question, Dougman. I was pondering the same thing yestersay.

    ReplyDelete
  16. According to Drudge, there are now more Mexicans going South than going North.


    I guess now "Mexico" will decide to build the fence. :)

    ReplyDelete
  17. .


    No not funny at all. In this case the phrase "Guns or Butter" apply. Stopping stupid wars may not sufficient but as was pointed out it would be "Step One".

    .

    ReplyDelete
  18. step one?

    stop printing worthless money.

    stop funding islamic nazi governments

    stop providing opec with free protection

    Reduce UN funding to 4%

    that is a 1st step

    ReplyDelete
  19. Partly right, but, right now, printing that "money" is the only thing keeping us out of Depression. That's why you have a fiat currency. It will lead to inflation down the road, but inflation is a very minor devil compared to "Deflation."

    ReplyDelete
  20. We need pictures of beautiful women, semi-clothed.

    Who o who can provide them?

    bob

    ReplyDelete
    Replies
    1. Ash, you got any Playboys in your golf bag there?

      bob

      Delete
    2. And just why is deflation so darn bad?

      It's a hell of a good time to buy a home.

      Prices down 35% and practically no interest payments.

      I wish I were young.

      bob

      Delete
    3. If you can't find naked babes on the internet you are one dumb mo....

      Delete
    4. Weimer Germany could have used a little 'deflation'.

      bob

      Delete
    5. So could Zimbabwe.

      bob

      Delete
  21. You need to go back and take another look at the "thirties."

    ReplyDelete
  22. It doesn't matter if "things are cheap" if you don't have any money.

    ReplyDelete
  23. On the hand hand, if things are dear, and you don't have enough money, it doesn't matter either.

    bob

    ReplyDelete
    Replies
    1. Here is some tough reading for those stout of heart -

      If those threatening Zimmerman's life are black, Attorney General Eric Holder has pretty much given them a pass. In 2010, Justice Department whistle-blower J. Christian Adams said that word had come down from above to "[n]ever bring another lawsuit against a black or other national minority, apparently no matter what they do."

      Take a look at the comments. Whitey is getting pissed.

      The jury will of necessity be multi-racial. It's odd there are, if what I read is correct, only six jurors.

      Two or three of which will be white.

      Hung jury.

      Retrial to prevent riots in the streets?

      Probably.

      Result?

      Hung jury.

      I'm outta here, except to say J. Christian Adams is an honorable man.


      bob

      Delete
  24. .

    For What It's Worth [link]

    You can adjust the numbers in the model based on what you think.

    .

    ReplyDelete
  25. I think I've set a personal lifetime record for "ambivalence toward an election."

    My "give a shit" has just dried up, and blown away.

    ReplyDelete
  26. .


    Someone earlier mentioned the 1% vs 99%.

    Somehow, I feel the 1% will always do pretty damned good.

    Dodd-Frank was weak to begin with. If the GOP has its way, it will be gutted.


    How the Euromess could roll back Dodd-Frank

    Given the mess that Europe’s in right now, no one wants to disrupt the continent’s banking system. That’s probably part of the reason U.S. officials are thinking about giving foreign banks — and the foreign branches of U.S. lenders — a free pass when it comes to the new derivatives regulations that are coming down the pipe.

    Under Dodd-Frank, U.S. derivatives dealers who trade with foreign customers or foreign branches of U.S. firms will soon be subject to a host of new rules — forcing them to raise their cash reserves, clear certain transactions on a central desk, and so forth. Now the Commodity Futures Trading Commission is thinking of issuing foreign banks and subsidiaries a temporary reprieve from the new rules, the Financial Times reports — a development that could open the door for a more permanent exemption...


    The Marshall Plan only Cost the US $13 billion in 1950 Dollars


    How many taxpayers dollars have we given to Europe since 2008 in addition to not enforcing regulation reform?

    [By 'given' of course I am including easy money, loan guarantees, IMF payments, loans at minimal interest, etc.]

    Oh yeh, and free advice.


    .

    ReplyDelete
  27. its really good post to read as i like the way you written your post thanks and regards !!!
    Security Traning

    ReplyDelete
  28. I love the smell of napalm after Apple reports earnings watching all those talking heads lossing their helmets as they dive for cover.

    ReplyDelete
  29. Craemer had it right up until yesterday afternoon, then he starting losing his nerve. He is on in five minutes. this should be entertaining.

    ReplyDelete
  30. A woman walked into the kitchen to find her Husband stalking around with
    a fly swatter.

    "What are you doing?"
    She asked.

    "Hunting Flies"
    He responded.

    "Oh! Killing any?"
    She asked.

    "Yep, 3 males, 2 Females," he replied.

    Intrigued, she asked.
    "How can you tell them apart?"

    He responded,
    "3 were on a beer can,
    2 were on the phone

    ReplyDelete
  31. GOP SEN: 'This may be the tip of an iceberg'...
    12th military member under investigation in scandal...
    FLASH: 2 More Secret Service Agents Resign...



    Quirk, headquarters northwest here. An assignment has come through we are needed Cartegena immediately. Please contact ASAPbobbo

    ReplyDelete
  32. Quirk, Quirk check in. It seems our Secretly Serviced and high up Military Men may have been given a ride. We are to assertain if any of the hookers might be ruskie spies. Methodology widespread even to the use of wriths of searchiori. I'm taking the Hot el Hilton, you can have the Caribe.

    bobbo

    ReplyDelete
  33. I guess time really is on my side. A wise man once told me that, ya know.

    Cheers.

    ReplyDelete
    Replies
    1. I wise man told me time is not on your side, but on your inside, and is a mode of human perception, a category of experience.

      :)

      bob

      Delete
  34. If you want to know where you are going, ask the person you meet who is returning.

    bob

    ReplyDelete
  35. An "illuminative experience" from The Fallen

    (Aside question: whatever happened to the earthly delight of zit popping? bob?)

    ReplyDelete
  36. Staying on subject, my retirement portfolio which includes SS and MC looks like a 500 piece jigsaw puzzle.

    Rufus is all Obama all the time, then he doesn't give a shit.

    ReplyDelete
  37. It sure is quiet in the Sharpton/Jackson camp.

    ReplyDelete
  38. I am in Arizona this week and have not seen hide nor hair of the desert rat. I did, however, see a gangbanger wannabe down on Buckeye who could have easily been Obama's son.

    ReplyDelete
  39. Quiet. Sure is.

    Too quiet.

    bob

    ReplyDelete
    Replies
    1. Maybe they went to Cartegena.

      Delete