Retirement Security: The Gorilla in Our Midst

In 2009, Knowledge@Wharton published an article referring to reforming Social Security and Medicare as “trying to tackle two 800-pound gorillas.” Amid end-of-year discussions concerning government spending on entitlement programs, two things have become clear: Social Security is on the chopping block and, for now, Medicare is off the table.

 

[CLICK HERE to read, “Social Security and Medicare: Trying to Tackle Two 800-pound Gorillas,” at Knowledge@Wharton, May 13, 2009.]

 

One cost-saving measure that’s been bantered about is increasing Medicare’s eligibility age to 67 from the current 65. According to research by the Kaiser Family Foundation, raising Medicare’s eligibility to 67 in 2014 would generate an estimated $5.7 billion in net savings to the federal government, but also result in an increase of about $3.7 billion in out-of-pocket costs for 65- and 66-year-olds, plus another $4.5 billion in employer retiree health-care costs. Furthermore, the study projects that the change would raise premiums by about 3% both for those who remain on Medicare and for those who obtain coverage through health reform’s new insurance exchanges.

 

[CLICK HERE to read, “House Dems to Obama: Don’t Raise Medicare Age,” at The Hill, December 13, 2012.]

 

[CLICK HERE to read, “Trade-offs in raising Medicare eligibility age,” at Associated Press, December 7, 2012.]

 

[CLICK HERE to read, “Raising the Age of Medicare Eligibility: A Fresh Look Following Implementation of Health Reform,” at Kaiser Family Foundation, July 18, 2011.]

 

This reminds me of the story of a father who tries to teach his son about money by offering to trade him two dollar bills for the son’s five dollar bill, observing that the boy would gain two times the number of bills. What sounds like a gain to the boy is a detriment to both father and son. Why? Because when they go to the corner drug store and the boy wants to buy a five dollar toy but now only has two dollars, the dad ends up footing the bill for the extra three dollars – lesson lost.

 

And you know he will. Just like our government steps in when its citizens don’t have enough money to pay for vital services like food and healthcare. One step forward, two steps back.

 

It kind of feels that way when you’re saving for retirement. Right about the time millions of baby boomers hit their income-earning stride, the recession pounced and they cut back on savings contributions to help pay down debt. Right about the time when retirement assets started taking off, a market correction hit and market values tanked.

 

[CLICK HERE to read, “Big Income Losses for Those Near Retirement,” at The New York Times, August 23, 2012.]

 

The fact is you have more control over your finances than you may think you do. After all, you just have to worry about your own household income – the federal government is trying to look after the vastly different interests of 114,761,359 households[1] in this country. Working out issues on a much smaller scale, with far fewer people to please, is much more manageable. You can always find ways to rein in your spending habits without impacting your neighbors, friends, and a bunch of people in a different socio-economic status whom you don’t even know. Plus, you have all those great money lessons your father taught you.

 

If that’s not enough wisdom to get you comfortably through retirement, please remember you have us to help you as well.

 

By contacting us, you may be offered insurance products for sale.

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[1] U.S. Census Bureau, People QuickFacts, December 10, 2012.