Is a longer life expectancy for sale? See what happens when you don’t have to take half doses of your medication and can afford a healthier life-style, a gym, hiking trails, and things that are out of reach for those living in poverty, watching every penny.
ST. JOHNS COUNTY, Fla. — This prosperous community is the picture of the good and ever longer life — just what policymakers have in mind when they say that raising the eligibility age for Social Security and Medicare is a fair way to rein in the nation’s troublesome debt.
The county’s plentiful and well-tended golf courses teem with youthful-looking retirees. The same is true on the county’s 41 miles of Atlantic Ocean beaches, abundant tennis courts and extensive network of biking and hiking trails.
The healthy lifestyles pay off. Women here can expect to live to be nearly 83, four years longer than they did just two decades earlier, according to research at the University of Washington. Male life expectancy is more than 78 years, six years longer than two decades ago.
But in neighboring Putnam County, life is neither as idyllic nor as long.
Incomes and housing values are about half what they are in St. Johns. And life expectancy in Putnam has barely budged since 1989, rising less than a year for women to just over 78. Meanwhile, it has crept up by a year and a half for men, who can expect to live to be just over 71, seven years less than the men living a few miles away in St. Johns.
The widening gap in life expectancy between these two adjacent Florida counties reflects perhaps the starkest outcome of the nation’s growing economic inequality: Even as the nation’s life expectancy has marched steadily upward, reaching 78.5 years in 2009, a growing body of research shows that those gains are going mostly to those at the upper end of the income ladder.
The tightening economic connection to longevity has profound implications for the simmering debate about trimming the nation’s entitlement programs. Citing rising life expectancy, influential voices including the Simpson-Bowles deficit reduction commission, the Business Roundtable and lawmakers on both sides of the aisle have argued that it makes sense to raise the eligibility age for Social Security and Medicare.
These are important considerations to look at as lawmakers consider upping the retirement ages for Social Security and Medicare. Those with in increased life expectancy tend to be those in higher incomes rather than the typical worker bees whose life expectancy has only increases slightly. Those who had lower incomes durings their working years have only nudged forward slightly in terms of longevity.
The argument that people are living much longer only applies to those with higher incomes. The poor remain, well, poor. Certainly these folks would be bad candidates to try upping Medicare age on. Social security is now climbing to 67. Will most Americans want to work until that age? Can most Americans work until they are 67 or older? More importantly, will older Americans fall victim to an ageist work force where older Americans are ‘sent to the glue factory’ as they age? Older workers are often the first to be laid off and find it nearly impossible to re-enter the work force.
Perhaps we need to rethink popular pat answers for reforming Social Security and Medicare. New age ceilings are deceptive and will not address the problems we think they will.
I’ve been an advocate of higher retirement ages for Social Security and Medicare in similar discussions on Moonhowlings. I still support those changes as ways to make the programs secure and viable in the long-run. We’re facing a demographic rality that people (affluent and non-affluent) are living much longer than when the programs were first created. They have not been changed to reflect that new reality, and the math just doesn’t work as the programs are now structured.
I’ve agreed with Moon many times that Social Secutiry and Medicare should not be considered “entitlements.” Both provide benefits that people have been earning through payroll deductions throughout their working lives. They are “entitlements” only in the same way that we are entitled to anything for which we have already paid.
However, on an actuarial basis, as Social Secutiry and Medicare are now structured, people can retire early enough to get far more in benefits than they paid in. Beneficiaries must be realistic about what they have earned.
I want both Social Secutiry and Medicare to be viable programs when I retire. I’ve earned it. The math doesn’t work now. If changes aren’t made, both programs will go broke. Continuing the same level of benefits through Federal borrowing will ultimately bankrupt the nation; just postponing the demise of Social Secutiry and Medicare.
Raising or eliminating the income ceiling above which payroll deductions stop would in fact turn the programs into redistributionist, entitlement programs. Such a scheme means taxing people now for benefits they will never receive, and providing entitlement benefits to people who haven’t earned them. That would be just another Federal money grab from people who are working and producing, that creates even another incentive not to work.
If we don’t extend the retirement age, what is the solution? I’m open to hearing suggestions from others.
I am curious why you think social security and medicare would be considered redistribution and entitlement programs if the ceiling were raised on the payroll deduction for social security. It seems that these terms are artibrarty with you. Why isn’t that the case now?
What becomes of the money a person has dumped into those programs if they don’t live that long? I realize if there are minor children they get a monthly check until they are 18. However, people do die who don’t have kids under 18. The govt. just keeps this money. They aslso keep the money collected from illegal immigrants and those with tax numbers only.
Lower income people AREN’T living that much longer than when social security was first available. They are living a little longer but not even close to the longevity more affluent people show. So what do we do? Let them die? They already are.
I think many workers feel they have earned social security and medicare. MOst have.
If Social Security and Medicare are retirement security programs, and benefits based on how much we’ve paid into them while working, they are not redistributionist, entitlement programs. Regarding losing the benefits if you die early, that’s how most insurance and defined benefit pension plans work. Some pensions allow you to take a pay until the second spouse dies annuity, but that results in a lower annual benefit. Benefits are based on average life expectancies, returns on the plans assets, how much you paid in, and other factors actuaries take into consideration. Some people win by living longer than expected; others don’t. That’s how most pension and insurance plans have always worked.
If you tax people while they are working in excess of the actuarially-expected benefits they will receive, you have changed Social Security/Medicare into a redistributionist scheme with negative impacts on productivity and economic growth. We all lose. Suppose you remove the ceiling and cause marginal tax rates to go even higher. Someone realizes now that combined with the higher marginal tax rate on their income, they will be paying into FICA (Social Security and Medicare) in excess of the benefits they can realistically expect to receive.
With the higher marginal income tax rates , plus additional FICA withholding that will never generate any benefits for them, plus state and local taxes, plus fees and whatever else government comes up with to pick our pockets, any families earning over $250,000 will be looking at total tax rates in excess of 50% or more. Who is going to work more, or take the risk of expanding their business and creating jobs under those circumstances?
My preference is to keep Social Security and Medicare earned benefits programs.
Plenty of folks get social securty who did not pay into the program. Non-working spouses jumps to mind. Then if that person outlives the working spouse, they get the higher amount. Spouses can also defer their own social security and take half of their spouses social security. There are all sorts of tricks. It isn’t quite as clean as it seems.
The ceiling can be raised rather than removed. That would help a great deal. Perhaps people should be rewarded more for not taking payments right at the time they are entitled to take them.
Medicare can also be tweaked some without affecting the entire program.
The problem remains though that less affluent people are often unable to work til 70, especially at hard labor. Sitting at a desk is one thing. Doing road or housing construction or even factory work is another.
Social Security has many insurance-like features also. With any insurance program you receive benefits if a covered event occurs regardless of the length of time you have been paying into the program. For example, if you become disabled you get benefits. A non-working spouse is covered for benefits under their spouse’s payments. However, even those are not “entitlements” in the pejorative sense in which that word has been used. If you are paying into a system for retirement, disability insurance, or other benefits you are not a moocher for using the benefits you have earned and for which you have paid.
I differ from some of my fellow Republicans in that I consider Social Security and Medicare good programs that need to be protected. That means managing them in a financially-sound manner. They should adhere to their original mandates of being retirement security programs providing earned benefits.
Low-income people are a different matter and should be discussed within the context of the social safety net rather than retirement security programs.
Define low income. I don’t mean poverty level poor. Where would you start them? Who would you kick out of social security because they are too poor? Some folks on social security get SSI as a supplement. I dont know the cut offs.
Afraid I can’t buy into your social security is like insurance thought. I think of it more as an annuity.
One thing I would do with social security is to take the disability feature out of that plan and put it into the general fund. I don’t mind the dependent children’s fund for those with a dead parent. It stops at 18. Disability can cover too many years and I know of cases of abuse there. I wouldn’t even care if people had to pay out to a special fund for it. I can’t imagine it being that much. How many of us would actually use it? In that case, it would be like insurance.
For that matter, those who didn’t want gov. disability could certify that they had some other form of disability insurance.
We’ve had this discussion regarding unemployment benefits also. Everyone has unemployment insurance payments withheld from their pay, in addition to the premiums paid by employers. If someone becomes unemployed through no fault of their own they have earned and paid for the unemployment benefits they receive. Those are not welfare payments to moochers anymore than is the death benefit from a life insurance policy paid to a surviving spouse. One caveat is that unemployment benefits must be supervised properly because there are many would-be moochers who would steal from the program if they could get away with it.
No one would accuse a widow receiving the death benefit payment from a life insurance policy after her husband dies of being a welfare moocher. Neither is the recipient of unemployment insurance benefits or someone receiving Social Security and Medicare benefits for which they have been paying their entire working lives. I also approve of the extension of unemployment benefits during the recent Great Recession. Most of the unemployed people did not become that way of their own choosing. Also, those payments help maintain a baseline of demand in the economy to prevent it from sinking even deeper into recession or depression.
But this is the rub – Social Security has its own funding stream. Currently 12.4% of your wages up to $113,700 and 6.2% after that are paid into the program. If this is not enough money to fund SS, then that is what needs to be fiddled with – either the money in, or the money out. Not a discussion about DoD or FDA or TSA, farm subsidies or anything else. SS needs to stand on its own. Notice in all the discussion about SS not one person has said to raise the FICA tax, it is all about raising ages or reducing benefits. Maybe it needs to be fixed, but not at the cost of DoD or TSA.
Same thing for Medicare – 2.9% of wages are paid (note, nothing is paid via capital gains, interest or dividends) – if medicare cannot stand on its own – fix the rate or fix the benefits.
Showing it all as a one lump budget is disingenuous at best. The only reason whey our politicians are concerned about SS and Medicare – is that the time has come that it will not cover all the spending that Congress has put into place. I LMAO at the same people who voted in the spending are now the ones so critical of any spending at all. They must be the ones suffering from dementia, not me.
NTK – when the marginal rates were up to 90%, it did not deter people from looking to expand and make more money – Carnegie, Ford, Rockefeller, DuPont, Edison, Morgan, etc. I think part of the problem today, is that you have people (like CEO’s) who think they are entitled to as much money and perks as they can get out of the company – and they do not want to pay taxes on any of it.