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Medicare and Social Security: Understanding What’s at Stake

En español | Medicare and Social Security are the foundation of retirement security for millions of Americans.

Workers pay into Medicare and Social Security during their working lives, and they count on the programs to help protect their financial and health security in their later years. These health and retirement benefits become even more important as employer-based retirement plans and retiree health benefits decline, home values fall, retirement savings shrink and health care costs rise.

Learn more about You've Earned a Say.

But Medicare and Social Security face a number of challenges in the coming years because of changing demographics and rising health care costs. We need to ensure that the men and women who are working toward retirement can count on receiving the Medicare and Social Security benefits they've earned.

What's at stake

  • The Medicare trustees report that within 12 years there will be a shortfall in the Medicare Part A (Hospital Insurance) Trust Fund, which helps pay for inpatient hospital care. Adequate funding is needed to ensure that Medicare can continue to pay for seniors' hospital care and prevent increases in seniors' out-of-pocket medical costs.
  • Social Security can pay full benefits for approximately 20 years, provided the U.S. Treasury repays the money it has borrowed from Social Security. After that, Social Security will still be able to pay about 75 percent of promised benefits for the next 75 years or more, even if no changes are made — but that's not good enough.

Financial snapshot of today's seniors

  • About half of America's seniors have an income that is under $20,000 a year.
  • Out-of-pocket health care expenses for a Medicare beneficiary cost about $4,600 a year, on average.
  • More than half of all older Americans rely on Social Security for 50 percent or more of their household income. Nearly one in four seniors relies on Social Security for 90 percent or more of their family income.

Financial snapshot of future retirees               

  • Half of today's workforce has no employer-provided retirement plan.
  • Almost one-third of working households age 21 to 64 have no individual savings set aside specifically for retirement.
  • Among households of people age 50 to 59 with retirement savings, most do not have enough; one in four has saved less than $27,000 and half have savings of less than $80,000.

How Social Security protects seniors

  • Social Security provides a foundation of income security to retirees and their families, workers who have become disabled and their families, and the spouses and dependents of workers who have died.
  • When an economic storm hits, Social Security provides reliable protection. Social Security benefits don't decrease when the stock market drops.
  • Unlike most private pension plans, Social Security protects against inflation through cost-of-living adjustments.
  • Social Security provides a guaranteed benefit over a lifetime. No one can outlive their benefit.

How Medicare protects seniors

  • Medicare begins providing guaranteed health coverage to people at age 65. By law, Medicare is required to provide a core set of benefits that helps pay for hospital and doctor bills.
  • Medicare can't deny coverage because of age or pre-existing conditions.
  • A person can't lose Medicare because of accumulating health care bills.
  • Medicare Part D helps pay prescription drug costs for those who choose to enroll.