Friday, March 4, 2016

Face It, the Only Thing that Can Save Future Retirees Is Expanding Social Security

The U.S. has just about run out the clock on safe retirement for most citizens. It's past time we took real action.

This looks mighty nice, but it's increasingly a unreachable dream for most seniors.

Atrios has been on this for a while:
Years ago I had an opportunity to speak at a retirement income conference. The title of the panel was something like "Beyond Social Security." My role was to say Beyond Social Security - MOOOOOOOAAARRRR SOCIAL SECURITY. Anyway, everyone involved - even the conservative guy (it's Washington, you always have to have a conservative guy)- admitted that nobody had any money to retire on and this was a big problem. But I was the crazy guy advocating for the most insane solution, while everyone else was suggesting various nibbling around the edges strategies. State savings plans! More tax benefits for savings! Essentially, just trying to modify the 401(k) slightly in hopes that it would work for The Kids Today.

But nothing's going to help current and near-retirees other than increasing Social Security benefits. Amazingly old people vote, and perhaps if there was a political party willing to (justifiably!) pander to their needs they might get some of those votes.

Years ago the fact that old people vote made me more sanguine about the prospects for Social Security and Medicare. And, yes, we have managed, so far, to not destroy them. But there is a retirement crisis which is only going to get worse. The 401(k) experiment failed. We have to do something for the people who were failed by it, unless you delight in seeing homeless 70somethings, coming to a suburban neighborhood near you.
I'm sure other people were on this, but Atrios was the first I saw to write somewhere (USA Today? The link doesn't work to the original article) that the 401(k) had utterly failed, and, face it, it has. The link above to David Dayen's analysis explains a lot.

Dayen explains that we've been traveling down the road to old-age poverty for a long time now. First, defined-benefit pensions began to disappear; 401(k)s took their place, but only high-income earners really could take advantage of them; then, Social Security benefits were cut in 1983 (to save them!); even before 1983, income levels were stagnating for most Americans; fewer and fewer Americans managed to save much for retirement.

(Read this tight history of pensions and retirement in The Atlantic.)

Since then, many, many proposals have been made. Republicans want to cut or gut Social Security and Medicare, one method being delaying retirement to 70. Centrists want to "save" Social Security and Medicare by "trimming them" and also raising the retirement age. Democrats want to save Social Security and preserve Medicare more or less the way they are, though they're open to raising the retirement age, as well. Indeed, the original 65 retirement age has crept up to 67. Another thing the Dems are guilty of is using cuts to Medicare providers as a means to "save" the system.

Regardless of all this trimming around the edges, people still get old and die, and most of them will not have enough money to retire in anything resembling dignity.

May I ask: Fucking why?

There is a simple solution, one that is, perhaps, the only solution: Expand and raise Social Security. Pay for it by raising the cap on payroll taxes. Expanding Medicare -- even, as Bernie Sanders and many others have proposed -- to include everybody, though not on the horizon, is likely the eventual solution to American health care.

The sooner we acknowledge this, the sooner we can avoid the eventual collapse of retirement itself. FDR brought us Social Security not because he was a genius or an innovator. He brought it because there was no choice. There is little choice now but to use it again in the same way, to avoid old-age poverty.

And to think we had solved that. Think again.

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