In 2022, it is projected that program costs will exceed payroll income coming into the fund. It is projected that the “reserve” account will be depleted in 2034.
Medicare (reserve account depleted in 2029)
- The Trust Fund is projected to be depleted in 2029.
- Taxes are expected to cover around 88% of estimated program costs, initially.
Ways to “Fix” the System
- Raise taxes (rates and ceilings).
- Increase full retirement age from 66 to 67 (those born after 1960).
- Reduce benefits.
- Cut 17-20% but probably focused solely on future recipients.
- Change benefit formulas.
- Change cost-of-living adjustment formula.
My Thoughts
- The “can” will get kicked down the road until something “has to happen.”
- A combination of higher taxes, lower and delayed benefits will probably be the solution.
- Cuts to “younger” people will be politically easier to pass vs. modifying benefits for those already collecting (except for changing the cost of living calculation).
- Summary – younger people should expect less and pay more while older recipients should not expect drastic changes but less inflation raises.
Source: SSA.Gov and Broadridge
965906 07/17
Mission Wealth is a Registered Investment Adviser. This commentary reflects the personal opinions, viewpoints, and analyses of the Mission Wealth employees providing such comments. It should not be regarded as a description of advisory services provided by Mission Wealth or performance returns of any Mission Wealth client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Mission Wealth manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
