Last week Congressman Mike Conaway hosted a town hall meeting in Eastland where this very topic was discussed. It is no secret that both of these government programs are in trouble. According to the Social Security Administration itself, moderate projections reveal the Social Security trust funds will reach exhaustion by 2034. And Medicare’s outlook, unfortunately, is worse. Part A, which is the hospital Insurance Trust Fund, is projected to completely deplete by 2029. This leaves very little time for Washington to come up with a solution—especially a good one.
There is a multitude of things causing this depletion. First, the government has borrowed billions of dollars from these trust funds. Second, these programs have entirely changed since their original premise of just providing for Americans in their old age. Third, retirees are simply living longer—a lot longer. Social Security was signed into law in 1935 guaranteeing retirement pensions to all Americans over age 65. The funny thing was that, at that time, the average life expectancy was only 61.7 years.
Congressman Conaway specified that there will be little to no changes for those who are nearing retirement, but those under age 55 will need to brace themselves for what is to come. Obviously there is not a current solution, so everything he stated is speculation based on recent data. However, he talked about options such as increasing the age to receive Social Security benefits and eliminating early retirement benefits. In regard to Medicare, the outlook is grim. It was the first time we have ever heard a politician say, we are not going to be able to keep our promise. Conventional wisdom has always been that this would be political suicide for whichever side of the isle said it first, but historical facts and figures have shown that something has to happen. And quickly. Those under 55 may never know the Medicare system.
The bottom line is retirement costs are going up and your retirement income is going down. If you haven’t started planning for it, don’t waste a minute more. Time is the best investment tool you have and you can’t get it back once you lost it.