Boomers Hit Social Security and Medicare Hard
The baby boomers just arrived. Did you miss it? Okay, here's the scoop.
On January 1, 2011, the first Boomers turned 65 - a total of 3.2 million people. That matters to us all because it means they've qualified for Medicare. But it's not just these Boomer pioneers that matter so much as the fact that for the next 19 years, 10,000 Baby Boomers per day will qualify for Medicare. Awesome.
Oh, and before I forget, three years ago, when this same first wave of 3.2 million Boomers hit 62, they qualified for Social Security. And over half of these decided to start collecting their monthly checks early, rather than wait until they turned 65. Sure, they're collecting only 75% of what they'd collect at age 65, but the theory is that the recession and subsequent tough times are motivating more people to collect early: they simply need the money.
With this new wave of Social Security recipients, and the continuing wave of Boomers coming over the next 19 years, the SS system's caseload will increase from today's 50 million to 84 million in 2030. That's an increase of 68%.
Now, remember the debt ceiling compromise that Congress agreed to? The whole thing revolved around the current federal deficit (over $1.5 trillion) and, somewhat, around the national debt (over $14 trillion). Not much was heard about the U.S. government's "contingent" liabilities. What I just described above about the Boomers starting to collect Social Security and Medicare is a big part of those contingent liabilities. The U.S. government has committed to paying out Social Security and Medicare benefits to all these people.
Of course, since the U.S. government runs a deficit every year (not just this year's $1.5 trillion deficit; they take in less money than they pay out every year), and since the FICA taxes that we all pay (we who are working now) won't cover the cost of the benefits that have been promised to these Boomers, the only recourse for the government will be to borrow money in order to pay out the promised benefits. So that $14 trillion+ national debt is guaranteed to not only continue growing, but to grow at an accelerated rated in the coming 19 years. Don't even ask about projections of what the national debt will be. It just makes me dizzy.
I'm bringing all this up for two reasons.
First, it reminds us that the nonsense of the recent debt ceiling "debate" is destined to be repeated in 2013. And unless something serious is done to address the problems we face, the nonsense will just go on and on. How long can it continue until something serious is done about it? You tell me.
Second, I've been reading about some reports that really have me worried about what's coming in the next few years. The financial condition of the government and many Americans is so awful that it's really gotten past the point of wondering whether we're going to hit a brick wall one of these days. Now I'm more wondering about what it will be like when we do hit the wall.
Sure, I know that the government will keep kicking the can down the road as long as they can. But I just don't think they can do this forever. And I'm not so sure that the economy is going to turn around soon enough or sufficiently enough to save their bacon. I think we're heading for some really troubling tough times - not that we're not already there. I just think things may get a whole lot worse before they ever get better.
I'll be writing more about this. You can't ignore it anymore. I know I'm not.
On January 1, 2011, the first Boomers turned 65 - a total of 3.2 million people. That matters to us all because it means they've qualified for Medicare. But it's not just these Boomer pioneers that matter so much as the fact that for the next 19 years, 10,000 Baby Boomers per day will qualify for Medicare. Awesome.
Oh, and before I forget, three years ago, when this same first wave of 3.2 million Boomers hit 62, they qualified for Social Security. And over half of these decided to start collecting their monthly checks early, rather than wait until they turned 65. Sure, they're collecting only 75% of what they'd collect at age 65, but the theory is that the recession and subsequent tough times are motivating more people to collect early: they simply need the money.
With this new wave of Social Security recipients, and the continuing wave of Boomers coming over the next 19 years, the SS system's caseload will increase from today's 50 million to 84 million in 2030. That's an increase of 68%.
Now, remember the debt ceiling compromise that Congress agreed to? The whole thing revolved around the current federal deficit (over $1.5 trillion) and, somewhat, around the national debt (over $14 trillion). Not much was heard about the U.S. government's "contingent" liabilities. What I just described above about the Boomers starting to collect Social Security and Medicare is a big part of those contingent liabilities. The U.S. government has committed to paying out Social Security and Medicare benefits to all these people.
Of course, since the U.S. government runs a deficit every year (not just this year's $1.5 trillion deficit; they take in less money than they pay out every year), and since the FICA taxes that we all pay (we who are working now) won't cover the cost of the benefits that have been promised to these Boomers, the only recourse for the government will be to borrow money in order to pay out the promised benefits. So that $14 trillion+ national debt is guaranteed to not only continue growing, but to grow at an accelerated rated in the coming 19 years. Don't even ask about projections of what the national debt will be. It just makes me dizzy.
I'm bringing all this up for two reasons.
First, it reminds us that the nonsense of the recent debt ceiling "debate" is destined to be repeated in 2013. And unless something serious is done to address the problems we face, the nonsense will just go on and on. How long can it continue until something serious is done about it? You tell me.
Second, I've been reading about some reports that really have me worried about what's coming in the next few years. The financial condition of the government and many Americans is so awful that it's really gotten past the point of wondering whether we're going to hit a brick wall one of these days. Now I'm more wondering about what it will be like when we do hit the wall.
Sure, I know that the government will keep kicking the can down the road as long as they can. But I just don't think they can do this forever. And I'm not so sure that the economy is going to turn around soon enough or sufficiently enough to save their bacon. I think we're heading for some really troubling tough times - not that we're not already there. I just think things may get a whole lot worse before they ever get better.
I'll be writing more about this. You can't ignore it anymore. I know I'm not.
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