It's Official: Medicare Trust Fund Will Run Out Of Money In 8 Years

Authored by Simon Black via,

Two days ago the respective Boards of Trustees for Medicare and Social Security released their annual reports for 2018.

As usual, the numbers are pretty gruesome... and the reports plainly stated what we’ve been talking about for years: the trust funds for both Social Security and Medicare are going to run out of money.


In the case of Medicare, the Trustees project that its largest trust fund will be fully depleted in 2026, just eight years away. In the context of retirement, that’s right around the corner.

For Social Security, the Trustee report stated that the program will spend more money on benefits in 2018 than it will generate in income and tax revenue.

So this year will be the first time Social Security has run a deficit since 1982.

But it gets worse.

Because according to the Trustees’ projections, the program will continue running larger and larger deficits until it too becomes fully depleted in 2034.

After that, recipients can expect at least a 25% cut in the benefits that they were promised and worked their entire lives to receive.

Again, these numbers come directly from the Trustees of Social Security and Medicare (which includes the US Treasury Secretary).

The reports were so dire that mainstream publications picked them up almost immediately.

Curiously, though, a number of newspapers tried to play down the bad news, dismissively telling their readers that Social Security and Medicare are just fine, and that those sobering projections don’t matter.

These are common refrains. They’ll state, for example, that there’s nothing to worry about because the government will step in and bail out the programs.

Is that so? Well, who is going to bail out the government?

According to the Treasury Department’s annual financial report, Uncle Sam is already insolvent to the tune of $20.4 trillion.

And those numbers are only getting worse too. Treasury’s own projections show annual budget deficits in excess of $1 trillion starting in 2020.

Simply put, a short-term fix of Social Security and Medicare would cost trillions of dollars. And that would just be a down payment on the long-term costs of fixing the programs.

The federal government simply doesn’t have that kind of money. Not even close.

So the expectation that some politician is going to come riding in on a white horse with checkbook in hand is ludicrous.

A second commonly held myth is that these Social Security and Medicare projections are irrelevant because they “have a history of being wrong.”

That’s completely untrue.

35 years ago, the Social Security annual report from 1983 projected that the program’s cost would exceed its income and tax revenue in… 2020.

The current report states that this is going to happen in 2018.

That’s only a two year difference from what they projected over three decades ago. So they pretty much nailed it.

More importantly, though, we’re not even talking about long-range projections, which typically look 50-75 years into the future. We’re talking about EIGHT years from now.

But even if you take a longer-term view, the data is still grim.

Social Security and Medicare provide benefits to people based primarily on tax revenue generated by those who are currently in the work force.

Essentially the programs require a certain number of workers paying into the system for every single retiree drawing benefits. They call this the worker-to-retiree ratio.

In order for this delicate balance to work, population growth has to remain fairly stable. Major swings in population growth throw everything out of whack.

The critical problem is that both fertility rates and population growth (which takes into consideration immigration and mortality) have been declining.

The US fertility rate has been on a general downward trend since 1990, and in steep decline since 2007.

And overall population growth rates for the past several years have been the lowest in more than five decades.

This contrasts with the years immediately following World War II, in which there was an explosion in population growth.

Those are the folks who are currently receiving Social Security and Medicare benefits.

But due to the declines in population growth, there are no longer enough workers paying into the system (even with unemployment at multi-decade lows) to support the programs’ current recipients.

The end result is what we’re talking about today: Social Security and Medicare can’t generate enough revenue to support their costs and will thus soon deplete their cash reserves.

The government is trying to put a brave face on this, telling us that the alarming drop in the national fertility rate is only temporary, even though it’s been falling steadily for three decades.

But they insist it will reverse soon.

Frankly, it doesn’t seem sensible to plan one’s retirement based the ability of these bureaucrats to accurately predict how much sex people are going to be having in the coming years.

Instead, let’s look at the big picture: Social Security and Medicare are both perennially mismanaged with a history of gridlock and inaction.

And the people who are responsible for overseeing these trust funds have clearly stated that the programs will run out of money and be unable to pay the benefits that have been promised.

What sane person would possibly put all of his/her retirement eggs in that basket?

There are clearly better ways.

One approach is to establish more robust retirement plans (like a solo 401(k) or self-directed IRA) and start maximizing your contributions.

These types of structures allow you to direct your capital to potentially more lucrative investments that go beyond mainstream stocks and bonds. Plus, in many respects, they can be cheaper to maintain.

This is important, because if you can squeeze out an extra 1% per year between cost savings and better investment returns, it can add up to hundreds of thousands of dollars in additional retirement savings when compounded over several decades.

Regardless of what happens (or doesn’t happen) with Social Security in the future, it’s hard to imagine you’ll be worse off for doing this.

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.


FireBrander NemesisteM Fri, 06/08/2018 - 13:57 Permalink

Without Medicare Part D:

Medicare pays for drugs if the doctor/hospital administers them to you.

Medicare does not pay if you take the drugs on your own at home.


Family member in the hospital for 10 days:

> Prescribed a 15 day antibiotic treatment.

>~$1000 billed to Medicare for the 10 days of pills (2 per day).

> We had to buy the last 5 days out of pocket...10 pills total...Walmart Pharmacy price....$12~!


At Walmart, the pills are ~$1 each, at the hospital they are ~$50 each!




In reply to by NemesisteM

FireBrander ElTerco Fri, 06/08/2018 - 14:10 Permalink

"Scrap Medicare"...LOL...not even the MIC Lobby can eclipse the power of the Geezer Lobby.

Republicans will fix it....:)...1,000,000% against "Socialized Medicine"...yet they'll fight to their political death to "fully fund and fix" the Veterans Hospital system which is 1,000,000% PURE SOCIALIZED MEDICINE!

We are fucked...

In reply to by ElTerco

HRH of Aquitaine 2.0 FireBrander Fri, 06/08/2018 - 15:50 Permalink

I have been in favor of shutting down all VA hospitals for years. Leave Walter Reed open, shut down the rest. FFS do you know how many VA hospitals have golf courses? It's disgusting the amount of money spent on landscaping and other crap at these places! They can be sold, for a massive profit, and easily be converted into condos or high-end luxury resorts, in some cases.

In others, these hospitals could be converted into county or city hospitals staffed by the local university and medical students to help the poor. At this point the only people getting good medical care at a VA are the employees due to being part of a government employee union and those gold-plated government employee medical plans. I say fire all of them. Send veterans a Medicare Part-V card and simply add veterans to the Medicare plans. Cheaper and easier.

In reply to by FireBrander

All Risk No Reward 1033eruth Mon, 07/23/2018 - 11:18 Permalink

@ Zendoff,

"Just print more they do for all the social welfare programs.

Like the Military......."

You've been deceived.  Money is lent into existence and a very real debt is created to make a zero-sum game out of the "printed" money.  It is a balance sheet.

Debt-based money systems LEND money into existence.

Your (our) de facto authoritarian rulers are the people who control the Money Power Monopoly.

And they will call in the debts in due time.  I predict the process begins under Darth Trump of the Bankster Clan.  He's the perfect fall guy to protect the debt-based monetary by attracting all the blame to himself.  Nobody on the planet who would be a better fall guy comes to my mind.


How To Be a Crook

Poverty - Debt Is Not a Choice

Renaissance 2.0 The Rise of [Debt-Money Monopolist] Financial Empire

Debunking Money

Krugman (and each MIT economist professor) is a Goebbelsian propagandist as he covers the crimes of wolves with his fake sheep suit and lisp.

Krugman to Lietaer: "Never touch the money system!"

In reply to by 1033eruth

5000yl FireBrander Fri, 06/08/2018 - 15:23 Permalink

I help people with their Medicare stuff. I have an agency. I like to be conscientious of peoples stories and not "one up" them... but what you are talking about is nothing compared to what I have seen. This kind of billing is only possible because of government inefficiency. When you hear of Medicare "fraud" it only happens when the billing goes straight to .gov.

"Maximum price for minimum necessary treatment" is medicare's motto

In reply to by FireBrander

FireBrander NemesisteM Fri, 06/08/2018 - 14:07 Permalink

Plenty of money for aircraft carriers, bombs and exoskeleton soldiers though.

Freedom isn't free...arms, legs, minds, LIVES and LOTS of money required for us to not only be "Free", but to "Spread Freedom and Democracy" across the planet and keep it free.


The trees of Freedom and Imperialism are watered with the blood, and money, of the sheeple.

In reply to by NemesisteM

waspwench FireBrander Sun, 06/10/2018 - 02:16 Permalink

Preserving freedom and democracy for ourselves, OK.

Spreading freedom and democracy across the planet ought not to be our responsibility.   Other nations should be taking care of their own freedom and democracy.   We may help a close friend occasionally, but most of the places where we are trying to spread freedom and democracy don't even want it.

In reply to by FireBrander

NoDebt Joe Davola Fri, 06/08/2018 - 13:26 Permalink

I swear the Tylers run stories about the "Trust Fund" because I have a pavlovian response to it and always feel the acute need to explain that THERE IS NO MONEY IN THE TRUST FUND RIGHT NOW.  ITS ALREADY OUT OF MONEY.

But it's a busy day and I just don't have the time for the longhand version of this explanation.  If you didn't catch it the first 15 times I explained it, I'm sorry.



In reply to by Joe Davola

JIMSJOE2 Joe Davola Fri, 06/08/2018 - 14:03 Permalink

That is completely different from the audit by a team headed by a professor at Princeton. She said that the Social Security Trust Fund, (created to hold funds when there was more coming in than going out), is expected to run out in 2-3 years depending on how many new people enter and of course pass on. This currently has been paying 25% of all monthly benefits. The social security that workers pay in to has been paying out more than it receives hence the 25% subsidy. Social Security Disability ran out in 2015 and Congress merged this into Social Security.

     In an interview she said she was shocked that Congress has done nothing not even warning people that in 2-3 years cuts will come in monthly benefits.

      Now the question is who do you trust, employees of SS/their over site board or an independent audit. Either way people are screwed sooner or later! Let's build another crap jet like the F-35 and spend more billions!

In reply to by Joe Davola

ElTerco JIMSJOE2 Fri, 06/08/2018 - 14:10 Permalink

The Social Security Disability program contains a large amount of fraud. I think the Obama administration was a bad steward of the fund, and they encouraged giving out long term disability funding to anyone who walked through the door. There are several distant relatives in my family who are 100% healthy and opted for living on disability.

In reply to by JIMSJOE2

Toxicosis Joe Davola Fri, 06/08/2018 - 14:10 Permalink

We won't officially run out, it'll be just damn expensive and intensive to get what's left out of the ground easily or economically.  We used newer tech to frack the shit out of the country, but all of these companies are in massive debt.  So once the debt bubble blows up real good the majority of these frackers or fuckers whatever you want to call them will be dead, yet the demand for oil and it's products are necessary to run modern civilizations, so medicare and social security are a pipe dream.  Promises will not be kept, as the hydrocarbon foundation is decimated.

In reply to by Joe Davola

DosZap Arnold Fri, 06/08/2018 - 16:16 Permalink

SS/MC, are not guaranteed, SCOTUS has so ruled.

Thank AL Gwhore for that move,he got the SS Trust Fund the same as the General Funds.I do not see how they can call something an Entitlement,when we are still paying (retired), for BOTH, and we paid for all years we worked.It's OUR frigging money(yep I know the arguments), but whichever party cuts  SS,or MC they will never win the WH or an election again.As if it's free now?, my spouse and I still pay over $15k a year for health insurance(not counting Co-pays on prescriptions.)

In reply to by Arnold