I frequently play
golf with a friend (a real and good friend) who is rather more politically
conservative than I. We agree on some issues and disagree on others, which has
no effect on our friendship or the civility of our discussions.
Recently, as we
were just chatting about current events, the subject of Social Security came up
and I expressed some concern that people like Paul Ryan, himself, a SS beneficiary
as a teen aged survivor, seems hostile toward the system. My friend then
offered the opinion that Social Security is un(or less)necessary now because
of access to things like 401Ks and medical spending accounts. It struck me at
that point that there is a significant portion of our society who are simply
unable to understand or grasp the
concept that there are those among our citizens who, even though they may work
two minimum or low wage jobs, cannot even comprehend the idea of a 401K, IRA, or
other retirement vehicle because there isn’t any money left over.
The person with
the 130 IQ and a university degree who has parlayed that into a hefty
retirement from a major corporation and has spent 40 or more years in the
workplace with annual disposable income far, or even moderately, in excess of
that needed for sustenance essentials such as food, shelter, clothing, etc.
cannot, in far too many cases, fathom
that it’s simply not that way for everyone.
There are had
working, good persons in our midst who will do their level best to provide for
themselves and their children and still, unless it comes “off the top” like
Social Security and FITW, won’t have significant “disposable income.” Social Security
wasn’t incepted as a sole source of retirement income, but for many - too many
- of our citizens, that’s what it has become. Why? The decline in meaningful
pension plans other than savings is one reason, the cost of drugs in an aging
and longer-lived population is another. The same Congressmen who bemoan the
state of Social Security fear to even discuss the shameful drug industry stranglehold
on drug costs legislated into existence by Medicare part D. For those whose incomes
after retirement are marginalized, it is a travesty. One example with which I
am personally familiar is an individual with a $600 monthly bill for
medications essential to sustaining quality of life.
This is because even the copays are portions
of the full price which Medicare is forced to pay. This individual is one of a
couple, both medically disabled (really, not through the machinations of a
slick attorney!) and getting by on around $30,000 annually, all Social Security.
The drug costs would be far higher if it were not for the VA covering the
spouse. By the way, the VA does negotiate drug costs and copays are far lower. To
express this in the general tone of this essay, this couple pays more than ¼ of
their annual income for essential medications! Without Social Security….?
But, those like
Ryan (and in a far more civil tone, my golf buddy) simply see it as another “expense”
to cut because of its cost. There is a logical explanation for that (increased
cost), too. When the Social Security Act was incepted (1935) it wasn’t really
about immediate Great Depression aid, since those elderly (over 65) and retired
who were already unable to work received no benefits, nor did agricultural or
domestic workers, regardless of age. The act also allowed the eligibility age
to be raised from 65 to 70 any time prior to 1940, which never happened.
So, why the
concern now? Two really simple reasons, actually. The first, in 1935 the
average life expectancy of a US citizen (collectively) was 61. This meant that
on average at the time of the legislation, many “average” Americans wouldn’t receive
benefits, being deceased, even though their contributions had been paid into
the system! Today, that figure is 78.7 years of age, meaning that far more of
us are living far longer and receiving benefits. As an aside, even though we
rave about our health care systems, this number is only 26th in the
world, and about 3 years lower than the 36 nation Organization for Economic
Cooperation and Development (OECD) average. Why? Ask your Congressman in the
pockets of the health care and pharma industries.
The second
reason and just as easy to grasp is that the system is now dealing with the
76.4 million baby boomers born after WII. In the early-to-mid 1950s, the US was
experiencing about 120 births per thousand women of childbearing age. By about 1965,
that rate was hovering where it is today at about 63 births per thousand. Again,
for the math challenged, the birthrate is again relatively flat at only 52% of Baby
Boom peak figures! Since 1946 and
onward, the this “bulge” in population has generated ripples in every sector of
American life where age is a factor, be it obstetrics, insurance, TV
preferences, music tastes, numbers of drivers, college admissions, you name it.
It will obviously impact and in fact is already impacting, SS. I’m 75 and on Social Security, born in 1942.
What can be
done is simple, but painful to many. Increase eligibility age to reflect longer
lived and healthier people. Had the age for full eligibility been raised one
year per decade from 1960 on, until the age reached 70, there would be no
discussion now. Obviously, that would have involved “grandfathering” those close
to retirement (say within ten years) and would have been relatively painless. Clearly,
the issue now is that any such change will be delayed ten years in showing the
desired effect.
That said, it (incrementally
raising eligibility age) should still be done, explaining that it is essential
to the continued operation of the system. Secondarily, simply acknowledge that we
“Boomers” will not be here forever, and if we do nothing but gradually raise
retirement age, as of, say, ten (or eight or five years from now) there will
still come a time when the number of citizens achieving eligibility will begin
to decrease and he system will have “healed itself.” Of course, all this requires backbone
on the part of our governmental leaders.
I am not overly optimistic.
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