05/13/09 Baltimore, Maryland The credit crunch has hastened the predicted demise of Social Security and Medicare. The Obama administration admitted yesterday that they now expect Medicare to run out of money in 2017, two years sooner than the Bush administration predicted in 2008. Social Security’s imminent insolvency was bumped up four years, to 2037. That’s all under the assumption, naturally, that the economy will recover by the end of 2009.
Even those already sucking the government teat got a dose of bad news. Social Security trustees now predict, for the first time in over 30 years, that recipients will not receive any cost of living increase next year, or in 2011.
In just seven years (2016), the Social Security trust will enter deficit. Eight years at the current pace and Medicare will be totally wiped out. When do you think we’ll start worrying about it… 2015? What a mess.
Ian Mathias
Ian Mathias is the managing editor of Agora Financial’s Income Franchise, where he writes and researches about retirement, dividend and fixed income investing. Much of his work is featured in The Daily Reckoning and Lifetime Income Report – Agora Financial’s flagship income investing advisory.
Previously, Ian managed The 5 Min. Forecast, a fun, fast-paced daily look into the future of global markets and macroeconomics. He’s also worked in public relations, where media outlets like Forbes, AP, Yahoo! and MSN Money have syndicated his writing. If he’s not at work, you’ll probably find Ian on a bicycle, racing up and down the “mountains” of Baltimore County. Ian has a BA from Loyola University in Maryland.
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It will be interesting how USA meets the obligations, and what “adjustments” are made in the interim. Our esteemed leaders in Australia have just announced that we will have the pleasure of working 2 ADDITIONAL YEARS (from 65 to 67) before getting any Govt pensions (or even access to YOUR OWN MONEY via Superannuation)if you are born after 1957. Presumably that’s if you still have a job at that stage.
Tony,
Look on the bright side.
In 1935 when Social Security was enacted, the average lifespan here in the U.S. was only 59. Being that one could start collecting at 65, living long enough at present to collect ANYTHING of their own contributions must count for something!
pension funds do not work without supply side defecits
Ian Mathias
I am a concretive who has paid into social security since 1958 and Medicare/medicade since their inception in 1965. This was never a choice on my part; in fact I spent considerable effort trying to get my elected representatives to end these programs. All I ever received was the ubiquitous “ I am so glad to receive your comments…, look what I have done.”
However, I resent your ignorant and condensing comment:
“Even those already sucking the government teat got a dose of bad news. Social Security trustees now predict, for the first time in over 30 years, that recipients will not receive any cost of living increase next year, or in 2011.”
I retired earlier this year at age 67 plus and I too, as you so crassly put it, am sucking the government teat.
I willingly forgo the COL with a “Take one for the team” concession if that helps. But after giving the banks, and others hundreds of billions to save them from their own self-inflicted stupidity I don’t want to hear another word about social security being insolvent. After all the metrics used to justify the bank bailout also show that Social Security is “TOO BIG TO FAIL.”
By the way, if you look at inflation since my first contribution to this Ponzi scheme and the inflation that looms its all moot anyway, isn’t it?
What the F? Social Security would be just fine except its coffers are full of IOUs from our glorious government borrowing plan. I have not heard one mention of the possibility of paying back the money “we” borrowed from it. Why? The dollar is being destroyed so we don’t have to pay anyone back. Which will be just great because there won’t be any money to pay any taxes with. Oh joy as long as we don’t have to pay any taxes. What insanity.
Who do you know that isn’t on the government “teat” these days? The government pays to over “educate” our young, so they can think up more “derivatives”. The government pays to “bailout” and “stimulate” our banks and businesses. The government pays the government workers to look the other way. The government makes excuses for our politicians while they accept graft. The government protects the medical industry to produce harmful drugs then give them the right to push these “miracle” poisons to everyone with endless commercials. The government pays for this waste and fraud with “free” drugs and “free” institutions. The government cries about the state of Medicare, yet they want everyone to be entitled have it. The government gives permission to our businesses to outsource our jobs. We are denied jobs, because we are too old or too disabled. We pay government workers to turn a blind eye on fraud. We create agency after agency to do nothing but to deny “benefits”. We allow Obama to make his campaign promises into lies, so that he can make yet another “accountability” agency. We give permission to CEOs to make more money than God, then continue this when the businesses are worthless. We have to pay for more roads that we have no money or oil to drive on. We have the government/media cartel telling us of how good of a job that they doing of reporting how bad it is. Our taxes are going up, while the houses are at 50% and still going down.
Now everyone wants to blame the “boomers” for the audacity of getting old. Maybe we could blame the poor for being poor. Or maybe we could blame the oil for not being “abundant”. Wow, I guess the brain drain was actually real.