The Medicare Trust Fund Myth!

Please understand:  we are not actually cutting Medicare, we are merely slowing the growth of Medicare, because if we don't it will bankrupt our country.

This is no longer a trust fund of Medicare.  Medicare had only $325 billion of assets in December 2011.  Medicare spent $542 billion in 2011.  In 1990, 62 percent of the revenue for Medicare came from payroll taxes.  That number has fallen to 38 percent.  If we do not rise income taxes immediately, the trustees¹ would have to deposit $27 trillion into the Medicare Trust Fund and $11 trillion into the Social Security Trust Fund.  If cost controls are not exercised for healthcare under the Affordable Care Act, and all indication say they will not be, the trustees would also have to add an additional $12 trillion to the Medicare Trust Fund. (What is the total so far? 27+11+12 = 50 TRILLION)

Oh, by the way, the trustees are only using a 75 year life expectancy so the numbers above are MUCH higher.

To add insult to injury a recent study done by the Institute of Medicine determined that 30 cents of every Medicare dollar is wasted.  How much is that annually? $750 billion.  What are we (collectively) doing?

If we do not find a way to deliver quality healthcare at an affordable price that encourages health care providers rather than driving them away in drove, we will bankrupt our country.  This will not occur by shuffling around how we pay for healthcare - Affordable Health Care Act.  The entire system needs to be re-examined and redone.  In the meantime, you are at risk of being hurt by the makeshift, stopgap methodologies being used by both parties to delay the inevitable.

Here are your options: a) pay higher taxes?  b) enjoy lower benefits?  c) allow inflation to destroy your financial future and all the wealth you have work so long to create?

Choice is yours; all of the above or explore the possibilities with me.

1.  Who are the trustees? http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/AboutTheBoard.html

Crystal Ball

Who do you know who knows what is going to happen in the next 30 days? 

No one and I mean NO ONE, from the President, to the Congress, to all the financial experts and the leaders of the world have any idea of what is about to happen in the world's economy.  Let me repeat that: NO ONE!  I am sincere when I say; they, and please add me to the list,  have no idea how to fix the problems we currently face.  This is all new territory with many challenges that have never been addressed.  There is real danger for everyone.

The world will face tax issues, healthcare issues, demographic issues, inflation, natural disasters, excessive volatility, and many challenges too numerous to list in this short email.

If you really think about it, I am sure you will admit that no one has the answers.  So tell me, has uncertainty served you well in the last decade?

If no one knows what will happen, should you be playing it safe or should you get aggressive with your money?  Do you have a strategy in place that will protect you from these unknown events.  Is it possible to develop strategies to take advantage of future events?

Simply put, having a relationship with a financial advisor could not be more, and never has been as, important to you as it is currently.  That advisor also will not have the answers to the problems discussed, but if they are worth hiring, they will have common sense, rock solid suggestions to help you weather the coming storms.

One thing I suggest is finding out where that advisor has their personal money.  Do not just take their word for it, ask to see some statements or some sort of proof.  You know the old saying - "Trust but verify."