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I don’t now how I missed this one: Republicans are considering pushing Social Security Full Retirement Age and Medicare benefits to age 70. Here’s an article for more details: click here
Medicare eligibility begins at age 65 and your full Social Security benefits begin between age 66 and 67 depending on when you were born. You can take Social Security benefits as early as 62, but the benefit is considerably reduced. Pushing these start dates back for Medicare and Social Security would significantly lighten the financial burden on the current system. Keep in mind that there’s no large bucket of money from which Medicare and Social Security pull from. Both are paid for by payroll taxes from the workforce of this current year.
That means if you took both your Medicare and at age 65, a portion of the funds you receive were from your payroll taxes the month before. With Baby Boomers retiring en masse for the next 15 years, that means that 10,000 people turn 65 every single day in America. Their children Generation X is also called the Baby Bust generation because boomers didn’t have as any kids in Generation X. This lag in the workforce means things could get dicey for government entitle programs the run off of the workforce taxation.
We can argue the morality and ethics of government programs. On the one hand, I’ve been promised (today) Medicare benefits at 65 and full Social Security at 67. I’m paying into the system to take care of my parents who are both collecting. However, that promise came from Franklin Delanor Roosevelt, modified over the years by people long dead. The new batch of government officials never made that promise but are trying to keep it solvent. It’s unfair to me.
On the other hand, Ponzi schemes and our current pay-as-you-go Medicare/Social Security scheme are identical. The benefits are not paid from a storehouse of stocks, bonds and cash. We are literally taking from current workers. Ida May Fuller only worked for 3 years under the Social Security payroll tax. She got her first Social Security Check in February of 1939. She received a check every month until she died January 27, 1975. She paid for 3 years and collected for 36 years. Source
How will it work out for you? Will you get your first check at 70 or 67? Will you live to 90 or die five dies after your first Social Security check is deposited because your parachute failed to open?
Hard to know for sure, but parachutes and Social Security are similar in that timing is everything.
Related: Making Your Own Retirement Rules