When public systems such as Social Security and Medicare were first created, we were living in a very different world. People tended to retire with a pension or some other form of retirement income, utilize Social Security as a supplement to that income, and then live about ten more years. There were also fewer retirees supported by these systems overall.
Now, with the Baby Boomer generation retiring, we’re facing a very different scenario. Medicare, in particular, is feeling a strain from several different directions. Currently, about 57 million seniors depend upon the Medicare program, but that number is set to swell to 73 million by 2025 as more Baby Boomers retire. And while we’re all happy about the prospect of longer lifespans, that trend also places greater strain on the public healthcare system.
On top of the sheer number of seniors to be covered by Medicare in coming years, we’re also witnessing dramatic increases in the cost of healthcare for everyone. Higher prices translate into even more financial pressure, some of which is passed on to the public through higher premiums and deductibles. Medicare premiums are set to rise by about 6.9 percent each year through 2020, with unknown increases continuing each year after that.
If politicians and lobbyists want the Medicare system to remain solvent, they certainly have their work cut out for them. In the meantime, as you plan for your retirement, you have some work to do as well. Watch the upward trend in healthcare costs and Medicare premiums carefully, as well as projections for the Social Security system. The retirement plan you formulated years ago might not accurately reflect the reality of coming years, and you might need to make some adjustments to that plan.
Give us a call, and schedule a meeting to discuss these issues. We can help you evaluate your retirement plan, identify any potential pitfalls, and make a plan to generate the income you need in retirement.Read More