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Medicare May Only Have Eight Years Left

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If you are retired or nearing retirement, be aware that you may have only eight years left to receive Medicare relief and possibly sixteen years left to receive your full amount of Social Security benefits.

A dire projection…coming straight from the Social Security Administration, as released in last week’s Annual Report.

The difference between last year’s projection and the most recent report is that Medicare depletion has been moved up by three years.

So, if you depend on Medicare, or if you are approaching retirement age and anticipate relief from this program, you still have eight years to find other ways to pay for your medical costs.

But if you plan on depending on Social Security as a major source of income for your retirement, be prepared for the benefits to dry up in sixteen years’ time.

Social security is comprised of the following:

  • OASI: Old-Age and Survivors Insurance
  • DI: Disability Insurance
  • OASDI: Combines OASI and DI
  • HI: Medicare’s Hospital Insurance

The last row below says it all.

And if the programs do expire, you will see an immediate 20% cut to your benefits.

Furthermore, take a look at the Medicare and Social Security costs in relation to the GDP.

  • SSA forecasts that this cost will undergo a sharp rise due to two factors:
  • First, the last of the Baby Boomer generation (1964) is set to retire; and

Second, the lower birth rate since the baby boom means there are fewer adults entering the workforce which in turn impacts GDP projections.

Social Security’s annual cost as a percentage of GDP is projected to increase from 4.9 percent in 2018 to about 6.1 percent by 2038, then decline to 5.9 percent by 2052 before generally rising to 6.1 percent of GDP by 2092. Under the intermediate assumptions, Medicare cost rises from 3.7 percent of GDP in 2018 to 5.6 percent of GDP by 2035 due mainly to the growth in the number of beneficiaries and then increases further to 6.2 percent by 2092. The growth in health care cost per beneficiary becomes the larger factor later in the valuation period, particularly in Part D.”

62 Million people—retirees, workers on disability, spouses and surviving children—are currently dependent upon Social Security benefits; the average monthly payment being $1,294 per beneficiary.

60 Million people receive health insurance through Medicare. Most of them are 65 and older.

There were a few positive points in the report, namely that fewer citizens are applying for disability insurance through Social Security. But overall, it’s hard to imagine that this provides much relief, and its impossible to predict how long such a decrease will maintain itself.

The bottom line is that if you are nearing retirement, hopefully, you are holding a strong portfolio of diversified assets including equities, cash, and precious metals.

Running out of money during retirement can be a painful and sometimes irreversible experience.

And if you’re depending on Medicare and Social Security to help get you through your Golden Years, you’re in trouble.

If you want to learn how to build a well-balanced portfolio, one that offers both security and growth potential, request our Definitive Guide to a Self-Directed Retirement.

This is a free guide which provides plenty of information for you to consider as you plan for your retirement.

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