Entitled to Social Security and Medicare? Think Again.

Released last week, was the annual report from Social Security and Medicare showing how long these programs will be able to provide benefits as promised. The report stated these entitlement programs, which many retirees rely upon, are in jeopardy. So where do we stand today, and what can we expect moving forward.

Currently, there are roughly 61.5 million people who receive retirement or disability benefits from Social Security. According to the report, this is the first-year costs/outlays will exceed income/deposits since the 80’s (chart per the WSJ). Due to higher costs, the program will have to tap into its 3 trillion-dollar trust fund. Although $3 trillion may seem like a lot of money, these reserves are forecasted to only last until 2034.  This is much sooner than previously expected. As a result, Social Security would be forced to cut recipients benefits to 75% of their scheduled amount.

For Medicare, it is even worse. Today, 58.4 million people receive Medicare. The Medicare hospital insurance fund is expected to be depleted by 2026. Three years earlier than anticipated. As a result, only 91% of costs would be covered by Medicare once we reach 2026.

The question is, what can be done to fix this problem? Well to start, Congress can act to improve the program’s finances.  Although, given the toxic climate in Washington, it is unlikely to happen any time soon. Stronger economic growth can generate new money for these programs. For example, if Trump is successful in negotiating new trade agreements, American businesses should thrive generating more revenue. This would result in more tax money going into these programs. But this takes time and may still not be enough.

Too often, individuals want to blame the government for this problem.  Yet the root of the problem is people are living longer and receiving more benefits than the plan was designed to provide. Instead of relying on the government to fix these programs, take the initiative to shore up your own finances. Invest the money you have sitting in a bank account or contribute more to your IRA or 401(k). Don’t wait until it is too late.  Talk to us today to get on track towards a secure retirement.  Relying on someone else may be disappointing.

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this article will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio.  Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Griffin Financial Advisors, LLC. The opinions expressed are those of Griffin Financial Advisors, LLC and are subject to change at any time due to the changes in market or economic conditions.