Posts Tagged ‘Medicare’

Who Are the 47 Percent?

Thursday, October 18th, 2012

Will the real 47 percent please stand up?  Although Republican presidential candidate Mitt Romney in a now famously leaked video suggested that nearly half of Americans believe that they are victims for relying on Social Security, Medicare, Medicaid, unemployment benefits, etc., we thought it might be helpful to look at who benefits the most from government largesse.

Writing in The New Yorker, columnist James Surowiecki notes that, “Even as he assails people on Medicaid and Social Security, and those who receive the earned-income tax credit, for being dependent on government, Romney didn’t mention another prominent group that’s dependent on government: the American companies whose profits rely, in one form or another, on government assistance.”

Historically, the federal government has protected American business with high tariffs, land grants given to railroads, and more than 80 million acres both onshore and offshore leased to energy companies.  An 1872 law still in effect lets mining companies lease federal land for just $5 an acre while keeping the profits from all the gold, silver or uranium they find.  Renewable-energy companies are subsidized; farmers receive nearly $5 billion a year in direct payments and billions for crop insurance and drought aid despite record-high food prices.

As currently written, the tax code helps business.  American manufacturing enjoys a $20 billion annual tax break, while state and local governments cough up $70 billion a year to lure companies or prevent them from moving away.  While this strategy creates new jobs in a given locale, some see the incentives as giveaways to help companies move from one state to another.  Another form of assistance is government regulations which can boost corporate profits, especially copyright law, patent protection and intellectual-property rights.  According to economist Dean Baker, patent protection is worth hundreds of billions of dollars a year to the pharmaceutical industry alone.

Realize that we are not taking side. We simply want to suggest that government assistance exists on both the 53 percent and 47 percent side of this electoral divide.  Surowiecki says that corporate welfare isn’t necessarily a bad thing. Some of these giveaways arguably do a lot of good. But companies that benefit from these policies are just as dependent on the government as the guy who gets the earned-income tax credit.

Meet the Very First Baby Boomer

Wednesday, June 8th, 2011

Social Security Commissioner Michael Astrue calls it “America’s silver tsunami.”

The name Kathleen Casey-Kirschling likely doesn’t ring any bells with the majority of Americans.  She holds the singular honor of being the nation’s very first baby boomer, born one minute after midnight on January 1, 1946 in Philadelphia celebrating her 65th birthday on New Year’s Day.  A retired teacher, Casey-Kirschling is the first of approximately 78 million baby boomers who will begin collecting Social Security and Medicare benefits over the next 20 years.  The Pew Research Center reports that approximately 10,000 baby boomers turn 65 every day.  Baby boomers, who were born between 1946 and 1965, are celebrating their 65th birthdays between 2011 and 2030.  Despite a recent Pew survey that found baby boomers feel more downbeat than other generations about their future, Casey-Kirschling is taking a positive approach.  “I’m OK with knowing that I don’t know what tomorrow will bring,” she said.  “I’m going to live for today.  And I’m thankful that I could live for today, and I am healthy.”  Casey-Kirschling retired at 60 and began taking her Social Security benefits at age 62.

In an interview with AARP at the time of her retirement, she said “I don’t work compulsively anymore.  My priorities are now family and friends, and if something’s not fun, I don’t want any part of it.”  Today, the New Jersey resident works part-time, travels with her husband, and spends time with her children and grandchildren.  Because Casey-Kirschling opted to start collecting Social Security at age 62, she receives only about 75 percent of the total amount for which she was eligible –approximately $240 less per month.  If Casey-Kirschling had waited until her 66th birthday, she would have received full benefits; at age 70 she would have received 135 percent of full benefits.

When asked how she deals with her celebrity, Casey-Kirschling said “In the beginning, it was overwhelming.  But I said I’m just going to be who I am and do what I can, especially for Social Security.  They asked me to do public service (ads) for the generation and help baby boomers apply (for benefits) online and get direct deposit.  Whatever I could do, I would try to have a positive impact.  So many things are negative in the nation today.  Like all human beings, we are not a perfect generation.  We certainly created so much, built so much and have an incredible work ethic to this day.”

Like many of her fellow boomers Kathy leads a full and busy life,” said Jim Courtney, Social Security Deputy Commissioner for Communications.  “By choosing direct deposit, Kathy’s benefit is safely and conveniently deposited into her bank account.  No matter where in the country – or the world – Kathy is, her money is as close as the nearest ATM or just a mouse click away through online banking.”

David Walker, formerly the comptroller general of the Government Accountability Office, Congress’ legislative arm, warned that before too long, the Social Security system will have more recipients than it can afford to pay out “We face a tsunami of spending due primarily to the retirement of the baby boom generation and rising healthcare costs,” Walker said.  “So what’s happened is we’ve gone from 16 workers paying into Social Security for every person drawing benefits in 1950 to 3.3 to one today, and we’re going down to two to one by the time the boomers retire in big numbers and that’s about where it will stay over the long run.”

“I think I’m just lucky to be at the top of the boom.  I’m just one of many millions and am blessed to have been in this generation and really blessed and to take my Social Security now,” Casey-Kirschling said.

Nearly Half of Americans Have Saved Only $25,000 For Retirement

Wednesday, April 13th, 2011

Americans’ confidence in having adequate money to retire on has hit a 20-year low, according to a survey by the Employee Benefits Research Institute (EBRI).  “We’re getting the most pessimistic results we’ve ever seen,” said Jack VanDerhei, EBRI’s research director and the study’s co-author.  “Those that are not well prepared are finally starting to get it.  The bad news is they’re not really reacting to it yet,” VanDerhei said.  “Hopefully this will be something that in the future will generate more savings.  People were shell shocked to some extent by what was going on in 2008 and 2009,” said VanDerhei.  “Many people wouldn’t even open their 401(k) statements when they came every quarter because they were too afraid to look.”  Now these same people are determining if they have adequate money saved.  This pessimism is despite the fact that the average balance of a 401(k) account rose to $71,500 at the end of 2010, an increase of approximately 11 percent when compared with 2009, according to Fidelity Investments.

Approximately 27 percent reported that they have little confidence about the amount of their retirement savings, an increase over the 22 percent reported last year.  The increase was driven by people with less than $100,000 in savings, according to the report.  The percentage of those with less than $25,000 in savings who lack confidence about having enough money in retirement soared to 43 percent in 2011, an increase from the 19 percent reported in 2007.  Five percent reported that their savings totaled more than $100,000, about the same as 2007.  Nearly 1,000 workers and 250 retirees aged 25 and older were interviewed for the survey.  EBRI has conducted the survey since 1990.

High unemployment rates, the size of the federal deficit, rising healthcare costs, lower returns on investment and worries about Social Security and Medicare funding have forced Americans to redefine retirement, VanDerhei said.  Regulators and legislators are examining the risk of Americans outliving their savings as life expectancies increase and funds have shifted from traditional pension plans to defined-contribution plans such as 401(k)s.  The Labor Department is examining whether it should be easier for employers to add annuities to retirement accounts.  Senator Jeff Bingaman (D-NM) re-introduced legislation that would require 401(k) plan sponsors to inform workers of the projected monthly income they can expect at retirement based on their current account balance.

Not all the news in the EBRI study is bad. “In the past, investors in general were clueless about how big of a nest egg it takes to accomplish their goals,” said Harold Evensky, a Coral Gables, FL, financial planner.  “The silver lining of going through a bad economy is that people are substantially more realistic about what they need to do.”  Although the majority of people have not yet made major changes, at least 62 percent say it is possible for them to save $25 a week for retirement. One expectation may need to be adjusted.  Among the 1,004 workers surveyed, 74 percent plan to work in retirement to supplement their savings, but just 23 percent of the 254 retirees surveyed say they have worked in retirement.

Tools are available online to help Americans saving for retirement determine how far they are on the road to financial stability.  Generally speaking, financial planners suggest putting away between 11 and 15 percent of each paycheck for retirement.  Additionally, the Department of Labor’s website has a section called “Top 10 Ways to Prepare for Retirement”.