Social Security and Medicare Face Insolvency Sooner--One More Thing to Worry About?

Just in case you needed another incentive to save for retirement, here it is. The government has just revised the estimates for the long-term solvency of the Social Security and Medicare Systems. 2008 marked the first year that Medicare actually ran a deficit, paying out more than was paid in. Government actuaries estimate that the Medicare fund for hospital care will be depleted by 2017, 2 years earlier than previously predicted. Meanwhile, Social Security will start burning cash in 2017 and will have wiped out its funds by 2037, four years earlier than prior projections.

So, what's on the table as far as possible solutions are concerned? We can be pretty certain that taxes will increase. There is one proposal gaining traction on the Hill to tax employee health care benefits in order to raise more capital for the soon-to-be involvement programs. Right now, employers and their employees do not pay taxes on such benefits. Another high probability outcome will be to raise the retirement age and/ or reduce benefits.

My advice for Americans, particularly those under 50--don't plan on these government programs to subsidize any part of your lifestyle in retirement. Unfortunately, the onus will be on us, and only us, to save for our future. Stand in line if you'd like to reclaim your hard earned money back from a system than, in effect, has stolen it from you!