Potential Retirement Financial Crisis

Monday May 19, 2008 USA Today had a front page article titled "Bill for taxpayers swells by trillions". This article states that US Federal Government deficit is far bigger than government estimate.

The official government accounting method stated that the deficit for 2007 was $162 billion. The government accounting method and does not look at future obligations. When future obligations are considered the number increased to $2,534 billion or $2.534 trillion.

Statistics:

• Long term financial obligations grew by $2.5 trillion last year primarily related to cost of Medicare and Social Security benefits.
• We are on the hook for a total $57.3 trillion in future liabilities.
• This equates to $500,000 per household.
• When the state and local government obligations are included the number increases to $61.7 trillion or $531,472 per household.

What is driving the future obligations? It is higher projected medical cost. For some reason, I am not seeing future medical costs going down or growing at a rate less than inflation. As people continue to live longer medical costs will continue to increase at a steady inflationary pace.

Use this information as a wake-up call that you need to save for retirement. With these future obligations on the horizon you need to prepare for a dramatic reduction in Social Security and Medicare benefits. Reduce your future dependency on Social Security and Medicare benefits by increasing your retirement savings.

Be prepared now for the potential retirement financial crisis.