Ask any financial pundit their thoughts on Social Security and if it will go broke or not. The answer, for the most part, is always the same: “Of course, it will go broke!”
The logic makes sense; there is a disproportionate amount of people heading towards retirement, who will be accessing the benefits provided by Social Security while having far fewer people funding the same benefits too.
To complicate matters even further, the trust fund that was created at the onset of Social Security has been depleted over the years by politicians who decided to fund their own pet projects with the money that was deposited in it, instead of letting that money grow.
So, the outlook does appear to be ominous, at best, especially with too many people taking, not enough people putting in and the government taking whenever possible, but even with all of this happening, the rhetoric and the worry may be all for naught, and the reason is very simple—your health care.
Flying under the radar when it comes to retirement is how the rules have been changed over the course of the last 10 to 12 years and because of these rules, the baby boomers who are in and heading towards retirement may, to their detriment, actually save Social Security for everyone else that will follow them.
Unfortunately for them, there will also be a large strain placed on their financial plans moving forward and quite possibly a chance that the wealth transfer that is often mentioned will be wiped out as well.
Starting in 1993, under a simple change to the Program Operations Manual System of Social Security, it was ruled that in order to receive Social Security, a person must also accept Medicare Part A or forfeit all benefits of Social Security.
Meaning that those in and heading to retirement must, once eligible and accepting Social Security, accept Part A of Medicare in order to keep receiving Social Security.
Once Part A is accepted and there is no longer any creditable insurance from an employer, then a retiree must also enroll into Parts B & D of Medicare or face late enrollment penalties too and, unfortunately, these late enrollment penalties are concurrent, total the length of time late and follow for the entirety of a retiree’s life, by the way.