Social Security and Medicare a Risk to Your Retirement

Recently the reports about the economy have been dismal – even on a good day. Eveery day we here something more about Medicare and Social Security and the problems they are having. We hear dire predictions about when funds will run out, and it’s not too far in the future and the economists aren’t kidding this time.

Unfortunately, this problem has been allowed to snowball from administration to administration and the buck has to stop here and now to save these benefits and their assistance to millions of elderly and disabled individuals.

How the lawmakers will do this is the question. We know that there are cuts that will have to happen and we know that many people will be affected. The question is how large are the cuts and how much will people be affected by them?

There are many people who do not have much income or savings and are counting on Social Security and Medicare to help them survive their retirement years. With the cuts proposed, retirement might be very diferent than they thought, even though they might have a little money saved up.

Many who were relying on retirement funds some of which hav been invested in stocks – which overall have fallen over 40% since last year – are not in a good situation either. The funds they depended on may not be there. They may be better off than some, but not much better off if they had money in institutions that have failed or nearly failed.

According to projections from actuaries, the funds will run out of money sooner than originally thought. In addition, with unemployment extremely high, those who are no longer earning wages are also not paying payroll taxes into Social Security and medicare. As a result, the revenue for those funds is lower, which could make the projections of running out of money even closer and more dire.

Finance writer Dan Caplinger says “Even though Social Security and Medicare are vitally important for most people, huge budget deficits and our current economic woes will make it extremely difficult to get these programs back on course financially. No one seems to want to raise taxes during a recession, but the proposals on health-care reform are all expensive.

The conclusion you have to draw is that government programs may not do as much for you as you’d hoped. By taking charge of your own retirement, you can anticipate medical costs and other living expenses and save accordingly. Given the precarious positions that Social Security and Medicare are in, the fruits of your pre-planning might be all you have after you retire.”

Even if the lawmakers are able to fix the systems in some ways, it is not a bad idea to start planning for a backup plan so that no matter what happens, you will have more to fall back on just in case.