Medicare Solutions BlogMedicare Bankrupt in 2017, Social Security in 2037
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Medicare Bankrupt in 2017, Social Security in 2037
Advisers to the Obama administration announced this month that the economic crisis has put both Medicare and Social Security on the fast track to bankruptcy. Economists predicted more than a decade ago that Medicare and Social Security would face bankruptcy in the near future, but reports issued by the government show that both programs – the primary health care and income sources for millions of retirees – have felt the effects of the economic downturn and will be running out sooner than expected. Treasury Secretary Timothy Geithner projected that Medicare will run out of money in 2017, followed by Social Security in 2037.
Though market conditions now appear to be stabilizing, many forty-somethings and younger find themselves questioning whether either program will exist when they retire and are planning for worst-case scenario. Financial advisers are trying to address the most immediate of these concerns, Medicare, by helping clients arrange ways to self-fund their healthcare after retirement. They are encouraging those under fifty to be more conservative in their spending during their remaining working years and to establish larger cash reserves to cover unanticipated healthcare costs in their elder years. Few think that Medicare will ever completely disappear, rather it will probably assume some other form as it would be political suicide for any elected official to allow the system to fail.
This kind of uncertainty has led many to prepare for health expenses during retirement differently. For a married couple retiring in 2009, the total medical costs during retirement (beyond Medicare) would average around $240,000 according to Fidelity Investments. Some people are saving for these kinds of expenses through health savings accounts, which function like a 401(k) for health care costs. It is tax-free to withdraw the money for medical costs, and if these costs end up being less than anticipated, the remainder acts like an ordinary retirement account.
2 Responses to “Medicare Bankrupt in 2017, Social Security in 2037”
This really freaks me out… will Medicare or Social Security even be there when it’s time for me to collect from them? If not, WHY am I paying into the system? Will I ever see that money again?
It is sad to see the myth of social security bankruptcy advanced here. Do the numbers Kristen…it is very reassuring to know they work for your retirment quite well. Angry Bear has the posts AND the numbers…2037 is a projection based on faulty reasoning and accounting.
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