This year's budget deficit is really depressing. Growing budget deficits would result in increases in federal debt; consequently we would experience a slower economic growth and lower living standard. If current policies remain in place, in the next two years, budget deficit will exceed 3%GDP. The CBO's estimate for the cumulative deficit over the next 10 years is now $2.3 trillion.
On March 12, 2008, Congressional Budget Office released a Medicare funding warning which, by statute, is based on projections by the Medicare Trustees of when Medicare funding from general revenues(that is, spending not covered by dedicated sources, such as the Hospital Insurance payroll tax and Part B or Part D premiums) will exceed 45 percent. CBO estimates that,under S. 2662, the 45 percent threshold would first be crossed in fiscal year2014.
If the current trend continues, the fund is not sustainable for Social Security and Medicare program costs. As we approach 2011, which is the year the first wave of baby boomers reaches 65 and becomes eligible to Medicare(social security benefit is eligible at age 62), we can forecast a decline in surpluses of social security tax income over expenditures and turn into deficits. According to Trustees Report, "Growing annual deficits are projected to exhaust HI reserves in 2019 and Social Security reserves in 2041." Based on a poll "When do you plan to retire?" run by CNNMoney.com, 24% of people plan to retire around 65, 28% plan to retire as soon as humanly possible. Under current economic situation, the cost is growing way faster economy growth. This will lie huge burden on our generation. I don't want to be pessimistic, but if the government doesn't rearrange financing, the keep growing social insurance costs can lead to a bankrupt of the country.
When we begin to work after graduation, we may be faced with a very high social security tax rate, a more expensive Medicare plan, and a delayed retirement age and so do our parents.
Favorite blog posts, September 2024
2 weeks ago
1 comment:
I remember growing up my dad and all of his friends always talked about when they would retire at 65. It was just a given. You're definitely right when you say that baby boomers can't count on retiring at 65. When I look at the small amount my parents received for social security, and that was at a time when social security was good, it wasn't much compared to what they had to spend on just basic cost of living expenses. I know that there's no way social security will cover our families needs, and unfortunately combined with losses in 401K plans, early retirement is out of the question for many families. Your forecast may sound pessimistic, but I think it's pretty accurate, so we might as well face it.
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