Recession walloping Social Security and Medicare

The financial health of Social Security and Medicare, the government's two biggest benefit programs, worsened in the past year because of the severe recession.
MAY 12, 2009
The continuing U.S. recession has worsened the financial health of the government's two biggest benefit programs, figures released Tuesday showed. Medicare, the main medical program for the elderly and disabled, will even pay out more in benefits this year than the government collects in taxes for it. The findings released by trustees of Medicare and Social Security, the government's pension system begun during the Great Depression of the 1930s, is a blow to President Barack Obama's plans for a major reconfiguration of the health care delivery system in the country. A major part of his campaign last year was to bring almost universal government-run health care to the United States, one of the few developed countries whose medical systems are based on private medicine. Both Social Security and Medicare are financed through payroll contributions from workers and employers. The findings in the trustees' annual checkup on the programs did not come as a surprise. Private economists had been predicting that the dates the programs would begin to pay out more than they take in and that the dates the trust funds would be insolvent would occur sooner given the economic recession. The deep recession, the worst in decades, has resulted in a loss of 5.7 million jobs since it began in December 2007. The unemployment rate hit a 25-year high of 8.9 percent in April. Fewer people working means less being paid into the trust funds for the benefits programs.

Latest News

Americans share confusion, concerns ahead of Social Security's 90th anniversary
Americans share confusion, concerns ahead of Social Security's 90th anniversary

Surveys show continued misconceptions and pessimism about the program, as well as bipartisan support for reforms to sustain it into the future.

The advisor’s essential role as alternative investments go mainstream
The advisor’s essential role as alternative investments go mainstream

With doors being opened through new legislation and executive orders, guiding clients with their best interests in mind has never been more critical.

Advisor moves: Raymond James snags advisor teams from RBC, Wells Fargo, Thrivent
Advisor moves: Raymond James snags advisor teams from RBC, Wells Fargo, Thrivent

Meanwhile, Stephens lures a JPMorgan advisor in Louisiana, while Wells Fargo adds two wirehouse veterans from RBC.

Private equity’s courtship of retail investors irks pensions, endowments
Private equity’s courtship of retail investors irks pensions, endowments

Large institutions are airing concerns that everyday investors will cut into their fee-bargaining power and stakeholder status, among other worries.

J.P. Morgan Securities on the hook for $1.1M to advisor in back-pay dispute
J.P. Morgan Securities on the hook for $1.1M to advisor in back-pay dispute

Fights over compensation are a common area of hostility between wealth management firms and their employees, including financial advisors.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.