Are Social Security and Medicare Programs at Risk of Depleting Their Funds?
As per the American Association for Retired Persons (AARP), a remarkable 10,000 baby boomers reach the age of 65 every day. The increase in aging Americans and longevity are the main reasons why the Social Security and Medicare programs are expected to have financial insolvency issues in the coming decades. Unsurprisingly, the majority of baby boomers agree that preserving Social Security benefits is critical, even if it requires an increase in taxes paid into the system by working Americans. Payroll taxes are the primary source of money available to pay for social security benefits.
The boomer generation is keen to preserve social security benefits as many aren’t well prepared for retirement. The financial retirement picture for nearly half of the younger boomers (ages 55 – 64) is bleak, with reportedly no retirement savings at all. The US government is also unprepared to sustain full benefit payments. By the Social Security Administration’s admission, in 2034, the program will run out of reserves. At that time, benefits would have to be reduced by 25% unless the government can fix the program’s long-term funding shortfall.
How Much of Your Social Security Benefits Do You Need for Health Care Expenses?
This same group of unprepared boomers also appears uncertain about how much of their savings will be absorbed by long-term care costs. Health View Services Retirement Healthcare Cost Index, which calculates the percentage of Social Security benefits required to address total lifetime retirement health care expenses, reveals expected health care costs on retirement budgets. It shows a healthy person retiring today will use 48% of their lifetime Social Security benefits toward health care expenses.
You Can’t Rely on Medicare
About half of baby boomers believe Medicare will cover the cost of long-term care, but coverage is extremely limited. Personal financial resources, long-term care insurance, and qualifying for Medicaid are what most people will end up relying on. Each of these options requires preparation to ensure the money or government benefits will be accessible in the future.
Aging Successfully with the Help of Technology
How federal government institutions face the challenge of covering the costs of Social Security benefits and Medicare to a burgeoning boomer population will determine whether many citizens can age successfully. Beyond the more significant problem of funding these social programs, the government is looking to technology to cut senior health care expenses. Virtual assisted living and smart devices can help families care for older adults rather than transitioning them to medical institutions.
Joseph Coughlin, Ph.D., director of the MIT AgeLab in Cambridge, MA, and others testified before the Senate Special Committee on Aging to debate policy and program funding for American seniors. Coughlin recommends that virtual reality (VR) become a standard device among senior living communities, assisted living, and nursing homes. Not only do residents engaging with VR have fun, but they’re also less depressed and more engaged in active conversations with other residents as a by-product of the technology.
Other technologies include smartphone apps with health functions, smart glasses to help prevent accidental falls for seniors with limited eyesight, and a pen for people with reduced vision to identify items. These and other tech devices can create a better aging experience and reduce the need for hospitalization due to falling, reactions from incorrect prescription dosages, and other emergent care needs. Programs like Medicare will benefit as these incidents become more preventable.
A combination of restructured social program funding and technology applications can reduce overall costs associated with baby boomer retirement. As the federal government begins to tackle the issues for seniors, there is a lesson to be learned. We all need to prepare ourselves for retirement and health care issues.
We hope you found this article helpful. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact our Reno office by calling us at (775) 853-5700.