From the tax bill to cuts in Medicare funding, Trump and Congress could create hurdles for your golden years.
President Trump promised not to cut Medicare and Social Security during his campaign — but Republicans want him to. The fate of that, and the Affordable Care Act, remain uncertain today.
Concerns about health care have increased seven percent over the past two years for those approaching retirement, aged 45-80, says a new study from The Society of Actuaries, an organization that measures risk and uncertainty.
The same goes for those already in retirement. The study doesn’t confirm the specific reasons for their anxiety, but points out:
Pre-retirees and retirees are most concerned about their savings keeping up with inflation, having enough money to pay for a nursing home or long-term care if needed, and affording quality health care. Compared to 2015, there is increased concern.
Why wouldn’t Trump keep his word?
One reason: math. Plain and simple, it’s just how much federal spending goes to the two programs.
House Speaker Paul Ryan has already made it clear that Republicans want to cut funding to Medicare this year. He also said he has “begun convincing President Trump in private conversations” to reduce spending on the federal health program, the Washington Post reported. The same news report cited Ryan saying they wouldn’t attempt a funding reduction to Social Security due to rules the Senate has in place.
However, the Social Security Board of Trustees predicts they will begin paying out more than they take in by 2022. By 2034, the amount they take in could be depleted. Ultimately the board feels they may need to cut 23 percent of benefits if they continue monthly payouts.
GOP tax cuts may hurt more than they help
Aside from the SSBOT cuts, retirees may take concern with the recently passed tax bill. The Tax Cuts and Jobs Act does say it will protect against any changes to Social Security.
But financial experts predict the federal deficit — the amount the government collects and spends — to increase by $1.7 trillion over the next 10 years.
The “pay-as-you-go” law, or PAYGO, is designed to keep the deficit in check. Meaning if the federal deficit increases as much as experts predict, mandatory budget cuts will be forced on programs like Medicare. Which could add up to a $25 billion cut to the health care program this year, according to AARP.
The GOP is putting their money on hopes that tax cuts to the wealthy and corporations will in turn stimulate the economy enough to counter the budget deficits that may occur due to the tax cuts.
Tax cuts don’t help those already retired or near it, though. A lot of retirees don’t pay federal income taxes; if they do, it’s a small amount.
What are Social Security and Medicare?
Social Security and Medicare have similarities, which mean people commonly confuse the two.
Both are government-funded income benefits for seniors. The former was made law in 1935 to allot a stipend, or fixed monthly income; the latter was enacted 30 years later to provide health insurance.
Both are for Americans over the age of 65, no longer working, who have paid in taxes at least 10 years prior to receiving benefits. Close to 90 percent of Americans over the age of 65 receive Social Security, says the Social Security Administration. Over a third of Americans receiving these benefits rely on it for 90 percent of their monthly income.
The SSA estimated that 62 million Americans received roughly $955 billion in Social Security benefits last year. Social Security and Medicare make up the two largest pieces of the federal budget pie, according to an analysis by the National Priorities Project.
The same study reported both made up close to two thirds (61 percent) of total spending in 2015.
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Article last modified on February 23, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Does Trump’s Presidency Put Stress on Americans Close to Retirement? - AMP.