Last week, the 2018 Social Security and Medicare annual report was released—leaving American seniors worried and anxious for what’s ahead. The report, which aims to highlight the current and projected financial status of the programs, found that both Social Security and Medicare are in danger of running out of money within the next 16 years.
Basically, the expenses per beneficiary will exceed what the programs are capable of paying out by 2034, unless a solution is implemented by Congress. Here’s what you need to know:
Social Security Projections
Social Security is a U.S. federal insurance program that provides monetary assistance and benefits to retired individuals and those who are disabled and unemployed. According to the National Academy of Social Insurance, approximately 169 million Americans pay Social Security taxes and 61 million collect monthly benefits.
The Trustee’s report projected that Social Security will have to cut benefits by 21 percent in 2034, which would tap out Social Security trust funds—if lawmakers don’t take action to fix the program’s funding shortage. “That is when today’s 50-year-olds will reach the normal retirement age and today’s youngest retirees will turn 79,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, in a 2017 CNN article.
For the first time since 1982, Social Security has to dip into the trust fund this year to pay for the program in order to pay promised benefits in full—meaning costs will exceed its payroll income plus interest from the $2.9 trillion trust funds.
The Future of Medicare
Medicare Part A covers hospital and nursing home costs for seniors, while Medicare Part B helps seniors pay for doctor bills and outpatient expenses. According to the 2018 annual report, Medicare Part A will be depleted in 2026, three years earlier than last year’s projection. Part B will be financed in full indefinitely because the law requires automatic financing of them—yet the costs of Medicare Part B are scheduled to grow from 2.1% of GDP in 2017 to 3.6% in 2037, shared CNN.
These cuts are just another thing seniors and their loved ones have to worry about as people are living longer than ever before. Currently, 70 percent of people 65 and older need to invest in some form of long-term care in order to ensure that they will have access to quality care as they age. The depletion of Medicare Part A, plus the increasing cost of long-term care creates the perfect storm for older adults outliving their money, depending on their policy and what it covers.
Largest Demographic: Baby Boomers
Part of the current problem has to do with the fact that the demographics of American seniors have changed since the introduction of these programs. When Social Security started in 1935, 65-year-old men expected to spend about 13 years in retirement and women averaged 15 years in retirement. Now, men will live about 20 years in retirement and women almost 22 years in retirement.
According to The Fiscal Times, roughly 10,000 Baby Boomers turn 65 every day. There are more Americans aged 65 and older today than at any other time in U.S. history, which means there aren’t enough younger taxpayers to keep the system going like in previous years. According to Market Watch, there were 2.8 workers for every Social Security recipient in 2017; in 2007 that ratio was 3.3.
Protect Your Future
Looking to learn more about how to get involved and preserve senior benefits? The National Committee to Preserve Social Security and Medicare (NCPSSM) is a membership organization that advocates to protect, strengthen and boost Social Security and Medicare benefits for current and future older American generation. Here's what they recommend:
Join the Capitol Action Team—become an activist and have your voice heard to stand up for your benefits! Attend rallies and media events where you can meet with lawmakers, deliver petitions and attend advocacy briefings.
Sign a Social Security and Medicare Petition—Tell Congress how you feel, as your signature is your voice when you sign a national committee petition that you disagree with.
Call the Legislative Hotline—Connect with your Senators and Representatives, and stay up to date on the latest news on Capitol Hill. The phone number is 1-800-998-0180.
You’re also invited to join Social Security’s Chief Actuary Steve Goss on Facebook Live, June 14 at 7 p.m. ET, to discuss the future of Social Security. Steve Gross will speak about the 2018 Trustees Report and answer questions you may have about the report, live. RSVP here.
We encourage you to not only take action to protect your future benefits—but to take action to protect yourself—today. Medical Guardian medical alert systems offer round-the-clock protection and connection to life-saving services, in addition to your Care Circle (your emergency contacts). With the push of a button, you can receive the help you need when you need it—both at home and on-the-go, depending on the system that best fits your needs and lifestyle.