Social Insurance in Service to Economic Mobility

Mar 29, 2017 /

In a critique of Representative Ryan’s recent remarks on the American Healthcare Act, Forbes contributer Robert Hockett appeals to history to discuss the merits of social insurance programs like the Affordable Care Act and Social Security.

Hockett attributes the resurgence of Germany’s economy following World War II to the social insurance programs first implemented by Otto von Bismarck a century prior. Bismarck, no liberal or idealist, implemented social insurance programs out of stone-cold pragmatism—he knew a fearful, uninsured populace would weigh down the nation’s economy.

By shifting the fiscal burden of insurance from the individual to the collective, Hockett argues, we free those who would otherwise behave very conservatively—thus acting as economic dead weight—to pursue riskier but more economically healthy ventures. For example, someone who would ordinarily funnel their income into a health savings account might instead invest the money or start a new business.

Visit Forbes for Hockett’s complete remarks on the subject.

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Social Security as a Suicide Prevention Tool

Mar 28, 2017 /

A new study by economist Jeffrey DeSimone reveals a “significant, sudden drop in suicide rates upon turning 62 years old” particularly among men. DeSimone attributes this decline to the onset of Social Security eligibility.

His reasoning: Though Americans retire at various ages, all Americans are extended a powerful economic lifeline at age 62. Studies indicate most Americans are still electing Social Security benefits at 62, even if they’re retiring later.

This should not be construed as an endorsement of early Social Security claiming, which not only reduces the worker’s monthly benefit amount, but also has disastrous implications for his widow’s benefits. Nonetheless, DeSimone’s study serves as a stark reminder of the positive impact of social insurance on the nation’s health.

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Savvy Social Security March 16 Newsletter Now Available Online

Mar 17, 2017

In this edition, Elaine discusses the future of the Republican answer to Obamacare, as well as the practical effects this legislation could have on your clients.

Notably, two hefty taxes on top earners may be on their way out, but premiums for older Americans who retire before Medicare age may rise substantially.

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Women and the American Retirement Savings Problem

Mar 16, 2017 /

Women tend to live longer and earn less than men over their lifetimes, contributing to unique difficulties in saving for retirement. Every year, the Transamerica Center for Retirement Studies (TCRS) explores the problems which cause women undue hardship in retirement planning.

Some standout findings include:

  • 45% percent of surveyed women expressed medium-to-low confidence in their retirement prospects, compared to 32% of men.
  • Only 19% of surveyed women have a “Plan B” in the event that they’re forced into retirement sooner than expected, compared to 31% of men.
  • 27% of women expect Social Security to be their primary source of retirement income, compared to 23% of men.
  • Median household retirement savings among women comes to $34,000. The median for men is $115,000.
  • 34% of both men and women report that working with a financial advisor would motivate them to learn more about saving and investing for retirement.

Daniel Williams of LifeHealthPro provides further analysis here.

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House Republicans Unveil Major ACA Change Bill Draft

Mar 7, 2017 /

A full 123-page draft of the American Health Care Act may be download from the House GOP’s website.

The bill eliminates the Affordable Care Act’s individual health insurance mandate, as well as the employer group health offer mandate. Furthermore, Medicaid is being reframed as a block grant system, with an emphasis on controlling future program costs and the greater enforcement of Medicaid eligibility rules.

A comment from Speaker Ryan’s press office may be read here. Further analysis from LifeHealthPro here.

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A Few Changes the New HHS Secretary Can Make in the Short Term

Feb 28, 2017 /

Our new conservative Secretary of Health and Human Services, Tom Price, was confirmed by Congress this month. Though the secretary cannot legislate, he can set the agenda in other ways—for instance, by changing how statutory laws are enforced. He may defang certain rules, while ramping up the enforcement of others.

Dr. Price’s potential next moves are analyzed here by Julie Rovner of Kaiser Health News.

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CRR Releases Brief on Cognitive Aging

Feb 24, 2017 /

According to Boston College’s Center for Retirement Research, aging affects cognition - “the act or process of knowing” in some counterintuitive ways.

Unsurprisingly, our ability to learn entirely new skills diminishes over time. However, the news is not all bad: our “crystallized intelligence,” or stock of useful knowledge, generally improves with age.

This growing stock enables us to continue making good decisions as we age through our 50s and 60s, remaining largely competitive with younger cohorts—despite generally needing more time to learn new skills. And though the risk of cognitive impairment increases as we age beyond 70, a majority of senior citizens remain qualified to manage financial decisions.

Future CRR briefs will provide a deeper dive into the problems of cognitive decline in old age, as well as their consequences for financial decisions.

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Savvy Social Security February 9 Newsletter Now Available Online

Feb 13, 2017

In Dealing With the Earnings Test, Elaine discusses the nuances of one of Social Security’s most challenging and least understood rules.

Though Elaine recommends avoiding the earnings test entirely by claiming at full retirement age or later, there are ways to minimize the nuisance caused by the earnings test—even for those who file early and continue to work.

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Social Security Awaits Appointment of New Commissioner

Feb 6, 2017 /

The program has been in leadership limbo since 2013, when the term of Bush appointee Michael J. Astrue ended. Obama attempted to appoint a replacement—Carolyn W. Colvin— however, her appointment stalled in Congress.

The commissioner oversees the successful administration of the Social Security program—commissioners are not policymakers so much as executives. For this reason, this appointment has less to do with the future direction of the program than Congress or the President’s cabinet. However, some Congressmen have taken issue with this continued vacancy, criticizing the Obama Administration for failing to give the issue their full attention.

A spokeswoman for Finance Committee Chairman Orrin Hatch (R-Utah) commented that “(Chairman Hatch believes) an agency benefits from permanent leadership, and remains disappointed in the Obama administration’s lack of seriousness in trying to ensure that such would be the case for the SSA.”

Now, with President Trump in power and organizing his administration, the future of Social Security’s leadership becomes an open question once more. In the meantime, Nancy A. Berryhill continues to serve as acting director. John Fritze of the Baltimore Sun further analyzes the issue here.

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Savvy Social Security January 26 Newsletter Now Available Online

Jan 26, 2017

In Can Social Security be Garnished? Elaine discusses the distressing practice of garnishing older Americans’ Social Security checks to pay off student debt.

The amount of student debt among consumers over 60 has quadrupled since 2005. Notably, these debtors aren’t struggling with the cost of their own educations: most of the loans in question were taken out to finance their children’s education, either directly or co-signed with the student as the primary borrower.

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CBO Paints Grim Portrait of Obamacare Repeal

Jan 20, 2017 /

The Congressional Budget Office released a report this week estimating the budgetary effects of H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015.

H.R. 3762, the brainchild of the incoming Secretary of Health and Human Services Tom Price, would repeal Obamacare’s mandate provisions and subsidy provisions but leave its market reforms in place.

The CBO estimates that these changes would cause the uninsured population to swell to 18 million in the first year following enactment, eventually hitting 32 million in 2026.

Furthermore, premiums for individual insurance policies would increase by 20 to 25 percent in the short-term and double by 2026.

The full CBO report in its proper context may be viewed here.

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Bridging the Retirement Gap

Jan 18, 2017 /

The Wall Street Journal recently ran an article by Timothy Martin about how many early proponents of 401(k) plans have expressed dissatisfaction in those plans were borne out.

Martin’s article proposes a series of actionable plans for American retirement reform; including state-run retirement savings options, mandatory savings plans, and Marco Rubio’s proposal to open the federal defined contribution system to non-government workers.

But as Slate’s Helaine Olen pointed out, Mr. Martin neglected one major possibility: expanding Social Security. Both Martin and Olen point out that 401(k) plans frequently fall through because of human error—the smartest and savviest investors find success with those plans, but others are not so fortunate. As a solution, the expansion of Social Security circumvents this problem.

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Savvy Social Security January 12 Newsletter Now Available Online

Jan 17, 2017 /

The full newsletter may be read here. In it, Elaine debunks some recent Social Security myths and shares her wisdom on how to successfully navigate the rumor mill in times of turbulence and transition.

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Two New Savvy Social Security Presentations Added in 2017

Jan 12, 2017

“Savvy Social Security: Basic Rules and Claiming Strategies” is a 30-minute presentation designed to tell the audience what they need to know make an informed claiming decision without going into the sorts of details you might reserve for face-to-face meetings.

“What’s New With Social Security: 7 Things to Watch in 2017” is a periodically-updated 30-minute presentation which tracks changes in Social Security under the new administration. It also explains Social Security and Medicare’s automatic annual changes—and what to watch for as the years progress.

Both presentations have been FINRA-reviewed and are available for download on the presentations page. Marketing materials for these presentations are not yet available, but will be posted when ready.

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Champions of the 401(k) Now Regret Implementation

Jan 11, 2017 /

Back in 1981, advocates of the 401(k) had hoped that the program would supplement then-prevalent corporate pensions. Instead, against everybody’s expectations, the 401(k) outright replaced corporate pensions—something several architects of the 401(k) program now acknowledge it’s ill-equipped to do.

Former American Society of Pension Actuaries Head Gerald Facciani, who repelled an attempt to gut the 401(k) in 1986, said the notion that the 401(k) could safely replace pensions was “a big lie” and that the program was “oversold.” Ted Benna, the former Johnson & Johnson benefits consultant credited with the development of the 401k plan, regrets having “held open the door for Wall Street to make even more money.”

Baby Boomers are feeling the ramifications of this shortfall as they enter retirement. According to the Boston College Center for Retirement Research, 52% of U.S. households at at-risk of going poor in retirement, up from 31% in 1983.

More analysis may be found at the Wall Street Journal.

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Savvy Social Security Article Reprints Updated for 2017

Jan 10, 2017

The calculations in the articles have been updated to account for Social Security’s automatic adjustments—the earnings test, COLA, and so on. They’ve also been upgraded to a new layout, pictured right.

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Democrats to Trump: Veto Changes to Medicare and Social Security

Dec 29, 2016 /

Prominent Democrats, including Sen. Sanders (D-VT), House Minority Leader Nancy Pelosi (D-CA) and incoming Senate Minority Leader Charles E. Schumer (D-NY) are planning rallies on Social Security and Medicare shortly before President Trump’s inauguration and calling on their colleagues to join in.

The rallies are intended to hold President Trump accountable for his campaign promise to leave Social Security and Medicare intact.

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President-Elect Trump Nominates Rep. Mick Mulvaney (R-S.C.) Budget Director

Dec 22, 2016 /

Rep. Mulvaney has a long history of voting against raising the debt ceiling—he expresses disappointment in how the debt has faded from the national conversation on his personal webpage. As budget chief, Mulvaney will be preparing the Trump Administration’s budget proposals to Congress.

Mulvaney has endorsed cuts to Social Security and Medicare in the past. It remains unclear how this departure from President-elect Trump’s promise not to cut Social Security benefits will be borne out in the new administration’s proposals.

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Savvy Social Security December 15 Newsletter Now Available Online

Dec 19, 2016

In Late-Career Wages Can Boost Benefits for Women, Elaine discusses how the nuances of the Social Security benefit calculation formula can work to the advantage of a non-working spouse who joins the workforce later in life.

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Rep. Sam Johnson (R-TX) Proposes Broad Social Security Reform

Dec 14, 2016 /

Rep. Johnson’s proposal would gradually increase the Social Security full retirement age to 69 and slow the growth of benefits for higher-income earners. The bill would also eliminate the retirement earnings test and phase out the taxes on Social Security benefits, measures Johnson argues discourage work.

Prominent Republicans such as Paul Ryan have not endorsed Johnson’s proposal, calling it “one of many” actionable ideas before the Republican-controlled Congress.

Johnson’s own explanation of his proposal may be read here, and the full text of the bill is available here. The SSA Chief Actuary’s assessment of the proposal can be found here.

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