A December 2013 Congres- sional Budget Office (CBO) report found that the Social Security Trust Fund is in much worse shape than the Social Security Administra- tion lets on publicly. The system is running perpetual and growing annual deficits, which currently stand at 12% of revenues.
“As more members of the baby-boom generation retire, outlays will increase relative to the size of the economy, whereas tax revenues will remain at an almost constant share of the economy. As a result, the gap will grow larger in the 2020s and will exceed 30 percent of revenues by 2030,” according to the CBO report.
What these numbers mean for Social Security benefi- ciaries is that the program will run out of money with which to pay them full benefits sooner than they’ve been told. The Social Security Administra- tion’s own projections have grown progressively gloomier in recent years. As recently as 2008, the official line was that Social Security would be able to pay out full benefits through 2041. But in light of the CBO’s latest findings, the end game could come much sooner – perhaps in the mid 2020s.
Medicare is in even worse long-term financial shape. Near-term, Medicare patients will be adversely affected by President Obama’s (Un)Affordable Care Act, which mandates $716 billion in Medicare payment reductions through 2022. Access to quality care at overcrowded and understaffed hospitals (thanks to Obamacare) will become more difficult as doctors exit the system or refuse to accept Medicare and Medicaid patients.
Social Security and Medicare may have served your parents well. But the coming generational tidal wave of retirees born in the late 1940s through the early 1960s will change everything. In an environment where more than 78 million Baby Boomers will expect to depend on an over-strained government for many of their basic needs, only those among them who know how to be self-reliant and provide for their own basic needs can be fully secure in their retirements.