Boomers….Beware “Entitlement Reform”

social security administrationWhen we hear about the need to tackle entitlements if we are to have even the wisp of a hope of getting the federal budget under control, the two compelling questions become:

  1. Are Boomers “entitled” to Medicare and Social Security (is the term itself accurate), and;
  2. Is there actually a need to “reform” them?

First, to the question of entitlement.

I’ve paid into Social Security my entire working life (I started @ 16… that would be a ton of candles on my worker cake…), the promise being receipt of the benefits I’ve earned upon reaching a certain age.

The same goes for Medicare, which, like Social Security, is funded by payroll taxes; it gets additional funding by income taxes on SS benefits (which we will be paying) and interest earned on trust fund investments.

So…yes…we are entitled to them which is “beware #1”: Any argument to the contrary, often used to base debate on a complete overhaul of both systems, is incorrect.

Now, onto the need to “reform” them.

SS & Medicare were set up to pay for themselves, and in fact Social Security would be running a surplus were it not for the raiding of it over the decades to pay for other things.  Medicare is indeed rife with fraud (I’ve seen it with these two aging eyes as billing took place for my father for services that never occurred…we reported it…Medicare ignored it), but the good news is, unless the Medicare trust fund is being handled by Bernie Madoff, it ought to be doing well, so that’s a plus.

So, unfortunately, we do need reform them, which leads to “beware #2”:

Any reform will be useless without the most important change, not even whispered on Capital Hill –
Legislators’ ability to get their hands on those monies for uses other than the purposes of SS & Medicare.  Make both the Medicare & the SS Trust Funds off limits, period.

Once that’s in place, a few tweaks and we’re good to go.  For Social Security:

  • Change the formula for SS deductions so that income on earnings over $106K goes into the pot
  • Allow those making over $106K a year to claim only the percentage of SS equal to the percentage of their income they invested
  • Allow those making over a certain income upon retirement to not claim their benefits, if they wish to do so, putting that back into the pot
  • Raise the age at which we can claim our benefits, to match life expectancy (which was the original formula, we just haven’t been following it)

Onto Medicare.  This is one is simpler; rout out the fraud, and the system is solvent once more.  Yes that will take some investment in more investigators, etc., but the pay-off will be huge, the ROI significant.

Boomers are in charge, we have all the influence needed to make these reforms a reality.  We are entitled to these programs, so let’s be unafraid to fix them so they work well, now and through the coming decades.