Social Security and Medicare finances worsen

Associated Press ^ | 2009-05-12 | MARTIN CRUTSINGER

[justlurking]

The financial health of Social Security and Medicare, the government's two biggest benefit programs, have worsened because of the severe recession, and Medicare is now paying out more than it receives.

Trustees of the programs said Tuesday that Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner.

Medicare is in even worse shape. The trustees said the program for hospital expenses will pay out more in benefits than it collects this year and will be insolvent by 2017, two years earlier than the date projected in last year's report.

[PogySailor]

...and the giant trust fund will be depleted by 2037, four years sooner.

Snort! Trust fund? Does AP believe there's a giant piggy bank stuffed with cash somewhere in WV?

[Zeppelin]

Even a fraction of a percent interest savings account at my local bank would give me a better rate of return.

I'm getting 4.61% APY at my credit union. (a diamond in the rough) =)

[DrC]

“I’m not sure where those two pieces of information meet.”

By definition, the life expectancy of those reaching age 65 will be longer than the life expectancy of those at birth since the former excludes everyone who died before age 65. Thus, even if life expectancy at birth is only slightly more than 65 (as it was in 1940 and even 1950), those healthy enough to last until age 65 had more than a decade of life expectancy ahead of them.
http://www.cdc.gov/nchs/data/hus/hus08.pdf#026

“Retirement” is a relatively new concept ushered in during the 1940’s and 1950’s in the aftermath of Social Security. Until that point, many people had to work until they died since they lacked the savings to allow for retirement.

[Domandred]

I'm getting 4.61% APY at my credit union. (a diamond in the rough) =)

Wow. Best I can do is .45% with a $100,000+ balance in a money market. Standard savings is .2% at my local credit union (this is the one I half jokingly said I'd get a better rate of return than Social Security).

I moved my savings to ING Direct about two years ago. When I opened it I was getting 3% but now it's only sitting at 1.5% and I thought I was still doing good comparatively.

[11th Commandment]

So I wonder. The gov (fed) owes itself (ss) this debt. How much of the national debt would go away if ss forgave the fed?

I detect a little bit of cynicism.... you don't think the government would cancel all the debt it owes itself? It would only wipe out about 45% of the debt.?

[Zeppelin]

Yeah, I’ve had similar experience with my WaMu account. when I first signed up I was getting 4.98%, but I’ve seen that plummet to 0.83% last month.

A few months ago, I moved most of my cash to my credit union, which has been b/w 4.51% and 4.61%, pretty steady.

PM me if you want to check out their webpage. Being a local branch, I’m not sure whether you have to sign up in person.

The 4.61%(ish) is good for the first $30,000; balances above that get around 0.51% (I believe).

Also, there are a few requirements that have to be met each month.

(1) You agree to receive online statements (in lieu of mailed paper)
(2) At least (1) automatic transfer either into or out of the account.
(3) At least (12) debit purchases made with the debit card.

Let me know if you’re interested and I’ll hook ya up!

[Munz]

yet somehow “the One” is going to give us all trillion dollar health care ...

And they all lived happily ever after .... /s

[donaldo]

“L’etat, c’est moi. Apres Moi, le deluge.” Barark Hussein Obama.

[napscoordinator]

But, but, when Bush wanted to do something about Social Security the Dems said there was nothing wrong with the current system.

Yes but he wanted to basically make 401K’s for everyone...can you imagine the outrage right now when everyone had a social security account that is 50 percent less than started in 2003. Our losses in November would have been worse. I know it does not make sense since our Social Security accounts right now are zero, but the main population does not realize that. lol.

[napscoordinator]

Oh I hate the bashing of government workers...seriously! You act as if nobody had a choice. After you turn 18 you easily could have started off making 12,000 dollars a month and build up to 30,000 dollars with an end result of getting a 1100 dollar check a month. College would have gotten you a bit more money. Nobody gets rich being in government. Civilian sectors have more millionaires than government workers (exception politicians). I am not a government worker, but I just think it is ridiculous to bash them CONSTANTLY. I could understand if you did not have a choice but everyone does. Are you mad because you failed the civil service exam?.../sarc.

[GretchenB]

I have actually known a couple of good government employees, but far more freeloaders. With all the insane union benefits, and protections, one could hardly call these real jobs. Look around your office and check out how much deadwood there is!

[GretchenB]

Just googled up NAPS - National Association of Postal Supervisors - wow there’s a winner. I assume you’re one of their coordinators? In the early eighties, a toad selling stamps behind the counter was getting over $30k, no doubt a contributing factor to their massive losses - and I wouldn’t boast too much about passing their civil service exam.

[napscoordinator]

Sheesh go back to bed. Plus you know what they say about assume...you make an a$$ out of yourself. You obviously aren’t the brightest FREEPER in the bunch.

[napscoordinator]

Look around your office and check out how much deadwood there is!

Difficult to do since I am NOT a government employee as I stated in my post to you earlier.

[Doogle]

...when the government fails to address fraud and uses “accounts” for political advantage....the end result is higher taxes.
No one mentions the enormous amount paid to illegals NOW!
The fact that some even go so far as to fight for social security benefits for people who have never been in this country....never earned a dollar in this country, never paid a red cent in taxes. (illegals families drawing Social Security benefits in Mexico)

[GretchenB]

The problem is also that on one contributor’s account there are many people drawing additional benefits on this contributor’s account who have never paid into the system - spouses, ex-spouses, kids, adopted grandkids, etc. While this is a politically correct way to keep people out of the welfare lines, it also ‘gives’ to rich spouses that have never worked a day in their lives. This is true for medicare too.

[painter]

I have heard over $50 Trillion!

[RC2]

Before they come up with any new plans, they should clear the books and pay this back. Then they can redesign a new program. Until then, they will dig a deeper hole and we will be taxed to death.

[eraser2005]

“In 1940 the life expectancy for a white male was 60.8 years.”

Simple...

The life expectancy for a white male was 60.8 years... meaning that at birth, an average white male would live to 60.8 years old. However, many died in infancy, childhood, adulthood, etc.

The key is that in 1940 if you actually managed to live to retirement age, you actually had a life expectancy of 13.7 MORE years. The same thing goes today. While the stated life expectancy may by 75 years, those people who live to be 65 actually have a life expectancy significantly over 75.

Similarly, the life expectancy of people who hit 100 this year is not 75... it is somewhat over 100. The sample has simply narrowed.

So those people who reached retirement age in 1940 had a life expectancy significantly larger than the population in general - they had already survived through many perils in life...

[eraser2005]

If you don’t think its fair, fine... :)

But think about other proposed solutions:

1) Tax increases - who likes these?
Raising taxes by 1% (from 12.4 to 13.4%) covers 59% of the gap.
Eliminating the earnings cap (no higher benefits for higher contributors) solves 100% of the gap
Raising the cap 25% solves 26% of the gap
Taxing benefits like pensions solves 16% of the gap
Including all government workers (and paying benefits) solves 13% of the gap.

2) Benefit cuts - who has the guts to propose these?
Reducing COLA by 0.5% solves 44% of the problem
Reducing benefits by 5% solves 35% of the problem
Means testing to reduce benefits for those earning over $20k solves 80% of the problem but also unfairly punishes people for saving.

I simply say that raising the age is the fairest solution because it includes NO tax increases or benefit cuts, other than the number of expected years of benefits. And then it just reduces the number of years of expected benefits back to the same number of years as when social security was started. In other words, it comes as close as possible to maintaining all promises made without unfairly taxing younger workers to pay for benefits they’ll never see or some other bogus solution.

And since it is a gradual increase over 20 YEARS, the retirement age would acutally only increase by 55 days or so every year. We aren’t talking a quantum leap. If you’re near retirement, it will barely affect you.