Medicare and Social Security Will Run Dry

[Kowalski]

Unsurprisingly, Medicare and Social Security Will Run Dry Soon

Here is the good news: trustees for the Medicare program said Friday that its hospital insurance fund would be exhausted in 2026, two years later than was estimated a year ago. However, Social Security’s reserves are still expected to run out by 2033, just as earlier forecasts said.

The marginally better snapshot of the financial health of these two politically sensitive entitlement programs will likely do little to quell the partisan debate brewing over such programs and overall government spending. This debate between Congress and the Obama administration will transition into high gear this fall as the deadline for raising the United States debt ceiling draws nearer. Another moment of crisis will be when it comes time to pass the federal budget for the next fiscal year, which begins on October 1. Both House Republicans and Senate Democrats have passed their own prototypes, but they differ greatly in their approaches to taxes and spending.

“Today’s reports make clear that while both Social Security and Medicare have sufficient resources to meet their obligations for at least the next decade, it is important that we put in place reforms to strengthen these programs,” noted the Department of the Treasury on Friday. “Fundamentally, Social Security and Medicare benefits are secure today, but reform will be needed so that they will continue to be there for current and future retirees.”

The longer expected lifespan of Medicare’s trust fund means that benefits will not have to be reduced as quickly as previously thought. However, in their annual report, the trustees who oversee Social Security said that reserves for the fund that pays disability benefits would be exhausted by 2016, and all Social Security reserves, including the fund that pays retirement benefits, would run out by 2033.

Taken from http://wallstcheatsh...on.html/?ref=YF

Edited June 2, 2013 by Kowalski

[Simbi Laveau]

They have been planning this for years. Instead of admitting they are CUTTING OFF social se purity,they will just say it "ran out".

Every working person contributes to SS with every pay check. Hooowwww can it just run dry .

Yeah that

And,if this is the case,I've said it before ,I want reimbursement for every penny I paid into SS while working .

[ninjadude]

more complete hogwash from the right

Social Security is not running out of money. He is likely referring to the projected date–2033–when the Social Security system will have exhausted its multi-trillion dollar trust fund. But if no changes are made to the program whatsoever, the program will pay out 75 percent of scheduled benefits until the year 2086.

That is not at all the same thing as "running out of money." And linking a program that needs modest changes to remain fully funded over a 75-year window to a "clear and present danger" to the country is misleading.

http://www.fair.org/blog/2012/08/21/abc-social-security-running-out-of-money/

[Kowalski]

more complete hogwash from the right

http://www.fair.org/...g-out-of-money/

It's from the freaking Wall Street Journal!

[Kowalski]

more complete hogwash from the right

http://www.fair.org/...g-out-of-money/

By the way, what does it matter if it's 2026 or 2033, that money isn't going to be there for millions of people who paid into it for years out of their hard earned paychecks. Most likely it won't affect you, just your children or your children's kids. But, hey, if it doesn't affect you why should you care?

[Kowalski]

[/

For the past several years, Social Security's Trustees have been reporting on the accelerating depletion of that program's Trust Fund. As recently as 2008, the Trust Fund's doomsday was projected to be as far away as 2041. But over the past several years that collapse date has inched forward and now sits at 2033.

Unfortunately, even that projection looks like it's a bit too optimistic. It turns out that there's a very real risk that next year's report will move that date even closer.

What Happened?

Since the Trustee's Report was written in April, some news has emerged about the investments in the Trust Fund putting a drag on the returns.

Every year, Social Security rolls over its maturing long-term Treasury bond holdings, picking up new ones to replace the ones that are expiring. Because of exceptionally low interest rates, Social Security is earning less interest on its new bonds than it did on its old ones.

That lower interest, along with the fact that the program now takes in less in taxes than it spends in benefits, means the Trust Fund is on even shakier footing.

What's a Few Billion Among Friends?

Take a look at the scary trend line that shows the annual interest lost when the old long-term bonds matured or were sold versus the annual interest on the new long-term bonds:

Every year since 2010, the new long-term bonds being bought by Social Security pay substantially less interest than the old long-term bonds that are maturing. That red line is getting deeper, and the 2012 total is nearly $5.4 billion in annual interest foregone because the new bonds pay that much less than the old ones.

That amounts to $5.4 billion less available for paying benefits or for reinvestment. That's a $5.4 billion deeper hole the program faces next year than it would have if rates had stayed steady.

And that's just from one year.

So What?

Since 2010, the total annual income foregone due to lower interest rates has exceeded $10.5 billion. Since this only counts the long-term bonds that Social Security is using -- not the short-term certificates that get traded much more frequently -- those numbers add up to create a whole world of pain.

It's a huge deal, because Social Security is already paying out more in benefits than it takes in as taxes. The only reason the Trust Fund is still growing at all is because of the interest it generates on the Treasury bonds it holds.

With interest rates so low and net interest received dropping as a those old bonds mature, that "net interest" kicker is rapidly losing steam. The sooner it runs out of gas, the sooner the Trust Fund starts activelyshrinking, starting something of a death spiral as the stockpile depletes.

From the perspective of a potential recipient, this hastens the need for you to prepare for the Trust Fund's collapse. Every downward revision in the year the Trust Fund will expire hurts your chances to get ready in two ways. For one, the closer date gives you that much less time to prepare. For another, if you aren'talready preparing, then you've already lost the time that had passed since the last revision.

In other words, assume for the sake of discussion that the 2013 Trustees' Report moves the Trust Fund's anticipated run-dry date a year closer -- to 2032 rather than today's expected 2033. If you did nothing to prepare in 2012 because you had 21 years before the issue struck, imagine waking up when the next report is published to find that you've lost not one year, but two.

Taken from http://www.dailyfinance.com/2012/09/29/social-security-will-run-dry-even-sooner-than-the-updated-bad-pr/

[WHO U KIDDIN]

Perhaps some here may have forgotten but it has been claimed that the SS well has been running dry since Reagan was elected in 1980. At least that's what the MSM wants most naive Americans to believe, since Wall Street has been wanting since then to invest the entire SS Trust Fund in their speculative stock markets. God help us all!

[Kowalski]

Perhaps some here may have forgotten but it has been claimed that the SS well has been running dry since Reagan was elected in 1980. At least that's what the MSM wants most naive Americans to believe, since Wall Street has been wanting since then to invest the entire SS Trust Fund in their speculative stock markets. God help us all!

Looks like that might happen soon....

[Sir Wearer of Hats]

more complete hogwash from the right

http://www.fair.org/...g-out-of-money/

it'll pay out 75% ?

sorry but I'd want 100% of the money I paid in back, if not that money with interest added.

[Ashotep]

This may be part of the problem.

The federal budget surplus of 2000 quickly disappeared when Bush took office, turning into a sea of red ink. Bush borrowed heavily from the Social Security surplus to help obscure the fact that federal taxes were not bringing in enough revenue to pay for the wars and his tax cuts.

Pay Back the Money Borrowed From Social Security

The FY 2008 Presidential Budget projects $2.662 trillion in revenue for FY 2008. One-fourth of this revenue is from payroll taxes that are supposed to go towards future Social Security benefits. Since these benefits aren't needed today, the government "borrows" from the Social Security Trust Fund to pay for other costs.

http://useconomy.about.com/b/2007/02/11/fy-2008-budget-borrows-674-billion-from-social-security.htm

The government needs to stay out of it. Not their money to spend.

[Kowalski]

it'll pay out 75% ?

sorry but I'd want 100% of the money I paid in back, if not that money with interest added.

Exactly.

[Kowalski]

The government needs to stay out of it. Not their money to spend.

That's what the problem is! They robbed us, and we are saying NOTHING about it!

[Ashotep]

I don't think most people ever realize it. Its never really talked about.

[Kowalski]

I don't think most people ever realize it. Its never really talked about.

We should do more to get it known, because this is going to affect everyone in a few years. I mean people who have paid into this system (it's automatically taken out of your check and you have no say in it whatsoever!)for years are not going to have it there when they need it NOR will their children. And the way the charts look, I think the 2026 date is too optimistic. If your paying out more than your taking in, your going to be in the negative, and that's what's happening.

We need to have some SSI and Medicare reform, that's for sure. We need to make sure that the only people receiving SSI are people who paid into by working! We need crack down on Fraud. It's happening too much and nothing is being investigated at all. Sure, there are people who need it, but too many are abusing the system, and now we are going to be paying for it. It needs to stop.

[Yamato]

Taken from http://wallstcheatsh...on.html/?ref=YF

I was just listening to Herman Cain on his radio show and that's not something I do...I just didn't have my playlist or any CDs in the car this morning and his political advice for the republicans in 2016 is to "Go Bold" and do the 3 R's. Two of them were Repeal Obamacare and Restructure Social Security. Cain seems to have no idea how much worse shape Medicare is in than Social Security because he didn't even bring it up. It's clear that republicans want to come after our social security money, but it's also as if just repealing Obamacare is going to cure the insolvent federal health care program this country is going to have to pay for. It's reminiscent of the 2012 republican presidential campaign. All Mitt Romney said about spending in the final days of his campaign was complain about Obama's spending cuts to Medicare and Military. I'm sure that was politically appropriate to win those last minute undecided voters, but it goes to show that even the vaunted free market entrepreneurs of the right don't have the tools, the brains, or the will to solve our biggest fiscal problems. And you can't cut the military. That's sacrosanct. It's a choice between ginormous debt, military adventurism and tax cuts on the right, or ginormous debt and welfare adventurism on the left. Supposedly. But then Obama turns into a red-blooded neocon, and Mitt Romney starts whining about the liberal-socialist-Marxist's spending cuts.

Sometimes it seems like everyone is singing the same song about how unhappy they are with both parties and the government. Who are all these people voting for them? Unhappy people complain, and happy people vote, is that it?

[ninjadude]

It's from the freaking Wall Street Journal!

which is now owned by "faux news". It stopped being a reliable source for anything.

[ninjadude]

By the way, what does it matter if it's 2026 or 2033, that money isn't going to be there for millions of people who paid into it for years out of their hard earned paychecks. Most likely it won't affect you, just your children or your children's kids. But, hey, if it doesn't affect you why should you care?

yes it is. 75% payout if no minor changes are made. That's not zero. 2026 and 2033 are a LONG way off.

[ninjadude]

Taken from

They have been reporting, of course, they are supposed to. They are not whining. This is payout is expected by SS because of the baby boomers. The SS administration is not as stupid as your biased source claims.

[ninjadude]

it'll pay out 75% ?

sorry but I'd want 100% of the money I paid in back, if not that money with interest added.

That is such a far place in the future that MINOR changes can easily make it up. SS is not bankrupt. It is NOT out of money. And will not be out of money when that article says. We could make up most of it by just removing the SS tax income ceiling. Currently after you make 120,000+ I can't remember the exact amount, you don't have to pay it anymore in that year. It's a gift for rich people.

[ninjadude]

The government needs to stay out of it. Not their money to spend.

The US bonds issued are backed by the full faith and credit of the US.

That's what the problem is! They robbed us, and we are saying NOTHING about it!

No, there was no robbery going on. Are you guys drugged? seriously

[ninjadude]

. And the way the charts look, I think the 2026 date is too optimistic. If your paying out more than your taking in, your going to be in the negative, and that's what's happening.

this was completely expected and planned for by the SS administration.

We need to have some SSI and Medicare reform, that's for sure. We need to make sure that the only people receiving SSI are people who paid into by working! We need crack down on Fraud. It's happening too much and nothing is being investigated at all. Sure, there are people who need it, but too many are abusing the system, and now we are going to be paying for it. It needs to stop.

SSI and SS are different. You do not have to have paid in, to get SS disability. They spend a significant amount of time and money investigating fraud. What makes you think they don't? Oh, right, you read the "blaze".

[little_dreamer]

Right now I am making the assumption that it won't be there for me when I retire. It's almost like I view Social Security as a tax and not a future benefit. I would prefer to keep and invest the money but I don't have a choice in the matter.

There are only a few ways to avoid paying it:

1. Make too little money

2. Leave the country and renounce your U.S.Citizenship.

This is the case for income taxes, not sure how this applies to SS.

[Kowalski]

Right now I am making the assumption that it won't be there for me when I retire. It's almost like I view Social Security as a tax and not a future benefit. I would prefer to keep and invest the money but I don't have a choice in the matter.

There are only a few ways to avoid paying it:

1. Make too little money

2. Leave the country and renounce your U.S.Citizenship.

This is the case for income taxes, not sure how this applies to SS.

I agree.

When it's time for me and my husband to retire it won't be there for us either.....

Why not let the PEOPLE decide on how we invest our money for our retirement?

[ninjadude]

Right now I am making the assumption that it won't be there for me when I retire.

Please, based on what facts? because really, there are none.

[ninjadude]

Why not let the PEOPLE decide on how we invest our money for our retirement?

that would have turned out well in 2008 didn't it? I see that you don't have a 401K which lost most of it's value. Are you 12?