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Is Social Security In Trouble?

If the problems facing Social Security and Medicare aren't resolved, your benefits may eventually be cut.

Over the years, we've heard again and again that Social Security and Medicare are in trouble because of the lack of funding. Once again, the federal government has issued warnings that unless certain challenges are met, both the Social Security and the Medicare programs will become insolvent within the next twenty years or so.

What does this mean for you? If you have already retired or if you are reaching retirement age, you may not be affected within the next twenty years, but after that things may have to change. If the money runs out as the government predicts, benefits will still be paid, but there may be cuts in the dollar amount you receive.

According to the estimates provided by the trustees who are charged with overseeing Medicare, the largest Medicare fund is set to start operating in the red by 2024. The Social Security trust fund won't be able to meet its obligations around the year 2033.

For the millions of babyboomers who will be retiring in the near future, although this is not new news because we've heard it before, it is still worth contemplating. If the problems aren't addressed and fixed soon, it may mean severe cuts in benefits in years to come. As a retiree, you may receive less Social Security income and your Medicare benefits may not be enough to cover your medical expenses.

The reason it is so serious today is because members of Congress are refusing to work in a bipartisan manner to fix the problem. In the past, both parties have sat down together to work out compromises to keep both Medicare and Social Security solvent, but in recent years, politics has gotten in the way of constructive ideas and working relationships.

Pay attention to what is going on in Washington, DC. Some ideas may sound good, but on average, plans by both the Republicans and Democrats need to be examined very carefully.

  • One plan is to raise the age for receiving Medicare benefits from 65 up to 67. There is also talk of raising the age for Social Security eligibility. On top of that, many people have lost their personal investments and can't afford to retire.
  • Another plan is to privatize Medicare. This idea would give beneficiaries vouchers to shop for their own insurance coverage. Although this would save the government money, it could put many seniors at risk by putting thousands of dollars of their medical bills on their own shoulders.
  • The Healthcare plan that was signed into law by President Barack Obama has provisions in it to restrain rising costs in Medicare.

Many babyboomers have paid into the Social Security and Medicare trust funds through payroll deductions all of their working years. To be told that Social Security and Medicare may become insolvent should be enough to get everybody's attention. The longer the problem goes unresolved, the worse it can be expected to get.

As stated above, when the trust funds run out of money, the government will still be able to pay Social Security and Medicare benefits. This is because of the payroll taxes that will still be paid by young people who are just joining the workforce. If the problems with Social Security and Medicare are not fixed by those who are in government today, the burden will definitely fall future generations, meaning our children and grandchildren.

Note: Whenever the economy goes into a recession and people are unemployed, and unable to find jobs, it has a direct impact on future Social Security and Medicare forecasts. Once the economy recovers, forecasts get better and the issues are put aside until another recession comes along. The problems with Social Security and Medicare cannot continue to be put off until a later date. They need to be resolved as soon as possible.

For more information on Social Security benefits, contact your local Social Security Administration Office or visit www.socialsecurity.gov.

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