That Ain’t Peanuts

According to this report from FoxNews.com, the first member of the Baby Boom generation, a teacher who was born just after midnight on Jan. 1, 1946, filed for benefits from Social Security today. The report also quotes extensively the comptroller general of the General Accountability Office. I suppose I’ve known, like most people, in the back of my mind that Social Security and Medicare are going to run out of money in the relatively near future, but according to the comptroller general, the first date when Social Security will take in less money than it will pay out is in 2017, only 10 years away.

Several other alarming facts:

  • Currently, Social Security and Medicare, quaintly referred to as “entitlements” comprise 62% of the federal budget. All the other stuff, like defense, highways, homeland security, and the Office on Violence Against Women have to divvy up the other 38%. As the years go on, that part of the pie will only get smaller.
  • In 1950: 16 workers were paying into Social Security for every person drawing benefits. Today: The ratio is 3.3 to one. In the future: we’re going down to two to one by the time the boomers retire in big numbers and that’s about where it will stay over the long run.
  • SS is a relatively small problem compared with Medicare. The comptroller general said that over the next 75 years, the U.S. will have to pay out about $50 TRILLION in entitlements. SS only accounts for $6.4 trillion of that total, with Medicare weighing in at $34.2 trillion.
  • $50 trillion represents 95% of the net worth of every individual in the U.S

The next decade is going to be very interesting and very turbulent.

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