Social Security is a pawn in the negotiations to avoid a federal debt default, and that has stirred fear and confusion among current and future beneficiaries. President Obama has threatened not to make August benefit payments in the event of a default, and signaled that he is open to cutting Social Security if it helps him secure a big deficit-reduction deal with Republicans.
Let’s look at where Social Security stands on the D.C. chessboard:
Should I be worried that I won’t receive my Social Security benefit in August?
The bad ideas for cutting Medicare just keep on coming. The latest pitch came earlier this week from senators Joseph Lieberman, an independent, and Republican Tom Coburn. They suggested boosting Medicare’s eligibility age; increasing seniors’ out-of-pocket spending; and socking it to the wealthy via higher premiums.
As Casey Stengel said: “Can’t anybody here play this game?”
We don’t have a Medicare problem – we’ve got a problem with medical inflation and skyrocketing healthcare costs that is hitting all Americans, young and old. Plans like Lieberman-Coburn – and the Ryan plan — just shift costs around and don’t get at the real issue. To wit:
If you want to tick off a senior, just mention Social Security’s cost-of-living adjustment (COLA). The COLA has been on auto-pilot since 1975, when the first automatically-adjusted benefit adjustment was made, using a formula tied to the Consumer Price Index. A COLA was awarded every year from that time until 2008, but since then — nada.
Uncle Sam’s stinginess resulted from a quirky spike in the CPI-W — the index now used to determine the COLA — in the third quarter of 2008. Just before the economy crashed, the CPI-W spiked temporarily due to a big increase in energy prices. The result was a whopping 5.8 percent COLA for 2009. Social Security payments can’t rise until the CPI-W exceeds the 2008 level — and they can’t fall under federal law — so benefits were held level in 2010 and 2011.
Wells Fargo & Co. said last week it will stop originating new reverse mortgage loans at the end of June, expressing concern about rising loan defaults and the threat of foreclosures foreclosures among seniors. The bank — which accounts for 26 percent of the market — will continue to service 125,000 existing loans it has already written. Wells Fargo’s decision follows Bank of America’s exit from the market in February.
Most older job hunters are comfortable with basic business technology— computers, the Web, email and smart phones. But we still have some Luddites out there – you know who you are – trying to squeak by, hoping to finish their working years without getting fluent in technology.
That’s especially true of social media tools like LinkedIn and Twitter, which can play a big role in helping job hunters find new work in a hard-times economy.
The deductions on IRAs and 401(k) contributions is one of the deficit reduction options known in Washington as “tax expenditures” — that is, revenue the government foregoes through deductions, exclusions or exemptions. Overall tax expenditures — which also include deductions for big-ticket items such as mortgage interest and employer health plans – are worth more than $1 trillion a year.
The retirement saving deductions for pensions and defined contribution plans cost $143 billion in 2010, according to the federal Office of Management and Budget; some argue that the cost really is lower, since the deductions are deferrals of taxes that are paid down the road in retirement.
Charles Schwab has long been a leader in low-cost retail investing. Now, it’s gearing up for a run at the 401(k) market by hitching its wagon to two ideas whose time may have come: low-cost passive investing and investment advice for plan participants.
Schwab has never been a major player in administering 401(k) plans for employers. The market is dominated by companies like Fidelity Investments, Vanguard and Aon Hewitt. But Schwab is preparing to roll out a new platform for 401(k) plans that it hopes will help it to crack the code.
A report issued today on the nation’s housing market is full of all-too-familiar news on the state of America’s housing industry. But one statistic from The State of the Nation’s Housing stands out: home owners are going gray.
The number of U.S. households headed by someone over age 65 will jump 35 percent in the coming decade as baby boomers age, according to the report from the Joint Center for Housing Studies at Harvard University (JCHS).
But if your workplace retirement plan is handled through a mutual fund, brokerage firm or bank, the retirement income solutions offered most often are simply strategies for decumulation of your savings. They’re not designed to provide lifetime income, which is the only way to protect yourself from longevity risk – the risk of outliving your money.
U.S. Representative Paul Ryan thinks so. The House Budget Chairman points often to the Medicare Part D prescription drug program as proof that competition among private insurers has saved billions for taxpayers. It’s a key line of defense in the Republicans’ controversial plan to replace traditional Medicare with a privatized voucher program.
“The prescription drug benefit came in 40 percent below cost projections because it harnessed the power of choice and competition,” Ryan said on NBC’s Meet the Press last month.