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Retirement Planning > Social Security

Robbing Peter To Pay Paul

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It seems a bit like the old classic saw, doesn’t it? We borrow money from China and other places, and then give it to other countries, say Pakistan or Afghanistan. And, while we are involved in that exercise, the debt clock is racing forward: tick, tick, tick. Peter will loan us money as long as he believes we’ll pay it back, and Paul will accept our charity, so long as the purse is open.

Part of our largesse is to protect our sources of oil. (Canada supplies the most, but Mideast oil is very important.) And, of course, one of the reasons is we like governments that we understand. It’s not so much that we favor tyrants, but more that we like leaders we comprehend and know and that we fear the unknown. As brutish as Saddam was, he would probably still be in power if he had not played the weapons-of-mass-destruction card. (Yes, we probably should have known that Saddam, when it came to nuclear threats, was all braggadocio, but that’s moot now, water over the dam.)

And the money we are not giving away, we are spending for public programs, like Medicare and Medicaid.

Politicians, particularly those running for office, like to play on debt fear. One of the favorites is Social Security. There’s a whole segment of the population that thinks it won’t be around in 30 years, or, if you don’t like that number, pick your own. This comes about because there is little deep thinking in this country.

According to the Social Security Administration, one-third of retirees rely on Social Security for 90% of income, and another third relies on it for half or more of income*. By extrapolation, that suggests 75% of retirees find Social Security income critically important. So, who would discontinue Social Security? If it was discontinued, there could be anarchy and even blood in the streets. The absence of a retirement income program could be the one thing to topple the republic.

The other thing is this about Social Security: We pay for it. And, if we work past age 65, we pay for it again, by paying taxes on the money we receive from the taxes we already paid. Only the worst pension actuary in the world couldn’t make Social Security work. It’s a defined benefit plan, and the first pension I ever sold was a defined benefit plan. DB plans are easy-peasy to design and to fix.

If you want to worry, worry about Medicare. My wife and I have probably spent $100,000 or more of Medicare’s money in the past two years. (I spent over $50,000 myself, in the last six months.) Medicare is a critically important social safety net. It needs to be fixed and soon. The stuff about death squads and you not being able to have the operation you need? Forget it. The percentage of treatments not approved is small; it’s the total nut for all of the expenses that is the thing.

There has got to be some sort of reason among doctors, hospitals and Medicare. The truth is that, in the future, doctors and hospitals will have to continue to make less money for treating seniors. Government will have to come up with a leveling technique to provide stable income for physicians and care facilities. Doctors will have to move away from incentive-based medicine, at least for treating seniors. Hospitals will have to move towards four or six patients to a room and find ways to cut costs. Medicare will provide a fair and just level of basic care. If we want amplified care and private or semi-private rooms, we are going to have to buy extra insurance, or pay for it ourselves. I confess that I’m like everyone else; I don’t want to give up the right to go to M.D. Anderson or the Mayo Clinic and have the government pay for it.

However, I also know that in rural India, decent care is provided for pennies monthly for farmers through a co-op – the survival rates for heart surgery patients are equal or better than those in the U.S., and the doctors enjoy good incomes. The farmers don’t get semi-private rooms or a lot of coddling during recovery. One big difference is that they are apparently members of a hospital/doctor plan; there is no government and/or insurance bureaucracy in the mix and service is direct.

Do good work and balance your family and work. Be happy. And figure out a solution to the Medicare mess, okay? Try to make sure I get all the care I want and only have the benefit cuts affect others.


For more blogs from Richard Hoe, click here.


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