We all know that Social Security is slated to run out of funds if the whole program is not fixed soon. But, that’s not the only governmental program set to run out of funds that could send baby boomers reeling.
Estimates are that Social Security gives out about $40 to $50 million more than it takes in each year. That’s right – each year! But, maybe just as scary if not more so, is the fact that Medicare seems to be doing downhill as well.
While the projection is that Social Security will run out of funds by 2036, estimates are that Medicare may run out by 2024. The Medicare Trust Fund remaining asset balance fell below the recommended minimum level just this year. And last year, Medicare was in the red – to the tune of $30 billion.
It all sounds dismal, but it can be fixed. You and your employer both pay about 6.2% to Social Security from each paycheck. But, when it comes to Medicare, you and your employer only pay 1.45% per paycheck. While Social Security taxes are only taken out up to a certain portion of earnings – the first $110,100 you make in 2012 – Medicare is taken out of your entire earnings for the year.
Still, Medicare gets less money. Participants of Medicare still pay premiums, but those don’t come anywhere near to making up the difference between what is taken in and what is spent. And with Americans living longer and longer on average, it isn’t going to get any better unless something changes.
Fidelity estimated that a couple will need almost a quarter of a million to pay for healthcare costs during retirement – and that includes Medicare benefits!
What can you to do help protect yourself? There is Medicare supplemental insurance, but that doesn’t come cheap. Still, it may be cheaper than paying huge out-of-pocket medical costs during your retirement years.
As with the rest of our economic state, things don’t look good on the Social Security/Medicare front, but hopefully the minds in Washington can come up with something to save the programs for everyone.