by Paco Maribona, CSA August 16, 2014
This month Social Security celebrates 79 years, and last month Medicare celebrated 49 years, providing beneficiaries financial and medical security. Both programs help and protect individuals and grow the middle class. Before they became law, only the wealthiest could afford to retire. Thanks in large part to these programs, Americans now retire with dignity & independence not imagined several generations ago. Plus most seniors no longer face poverty.
Social Security & Medicare don't contribute to government deficits, as they are independently funded by workers and employers through their wages. Thus it's incorrect to say they need to be cut to balance the budget. Wall Street & some greedy rich would love to privatize and get their hands on these funds, but the people must protect these programs as our heritage, striving to expand services, not cut them.
Despite misinformation to the contrary, these programs are stable and solvent, not going broke. Social Security last year ran a $32 Billion surplus, adding to its $2.8 Trillion trust fund, and can pay all benefits for 20-30 years more. Medicare is also doing well, per the Trustees, its Hospital/Medical Insurance trust Fund will now have funds until 2030. That's four more years than projected last year, and 13 years more than before the passage of the Affordable Care Act (ACA).
"Medicare is considerably stronger than it was just four years ago, " said Health & Human Services Secretary Sylvia Burwell. She also noted the recent slow growth in the program's health spending will likely mean the Medicare Part B premium paid by beneficiaries ($104.90 for most) will remain the same for three years in a row. "That's a 0% premium growth" she noted (good news for beneficiaries/seniors).
However, all the trustees, including secretaries of HHS, Treasury, Labor, & the public members, stressed Medicare & Social Security's financial problems are far from fixed, especially as 78 million baby boomers are entering the programs.
Despite recent favorable developments, future financial projections show the need to make fixes and changes to solidify the programs. Removing the cap from Social Security wages, so everyone pays the same percent of wages, will assure Social Security funding for 75 more years. Moving funds into the Disability Insurance Trust Fund will stabilize that fund into the future. Raising wages & employment, plus providing a real path for immigrants to work and continue to pay into the programs, will stabilize and grow them, as more seniors age and use them.
Such changes will not only allow us to avoid cutting these vital programs, but to expand them. Given the small Cost of Living increases they have had, increasing benefits would give relief to both beneficiaries & the economy. ACA improvements could also help contain Medicare costs. Also changing to a single payer system similar to that in other developed countries (where they save about half of what we spend) could allow expanding Medicare to all.
We celebrate Medicare's & Social Security's birthdays, knowing our hard work pays for these benefits, and we'll continue to work hard to preserve and expand them for ourselves and our posterity. We must not let the media nor the 1% cut or privatize them. And we must let our elected officials know they too must work hard to keep and expand them.
Paco Maribona, CSA
Certified Senior Advisor
30+ year Independent Agent