December 19, 2012 — Legislation coming out of Congress in the next few weeks is likely to affect all Americans. Most of our federal tax rates will either stay the same, or we will fall off the fiscal cliff and rates will go up. As both parties state and restate their positions, there have been some new proposals that could potentially affect both social security and Medicare, both popular programs for baby boomers. Also in the news – cars that make driving easier for aging baby boomers.
The latest proposal being discussed to help keep Medicare solvent is to raise the eligibility age for Medicare from the current 65 to 67 years of age. It does have the virtue of saving a program money for a program that is headed for serious trouble in the near term (the latest estimate is that Medicare trust funds will be exhausted in just 11 years, 2024). But most folks think this proposal will get nowhere, as organizations like AARP are vehemently against it. The President is said to have taken this idea off the table. If the change in eligibility were made, it would affect millions of people in a negative way (although such important changes usually do not affect people already near the eligibility age).
Social Security Chaining
Indications are that President Obama and some Democrats have warmed up to the idea of a “chained” consumer price index. This approach would result in lower Cost of Living Adjustment (COLA) payments to Social Security recipients. The theory assumes that consumers faced with rising prices for some expenses will shift to less costly substitutes, which means that the COLA does not go up as fast. Some opponents of this approach (and there are many) refer to this as a “Diet COLA”, saying that seniors have many more inflationary pressures than the CPI measures. The impact of Social Security on the federal budget is theoretically neutral, as it is meant to be a self-funded program. Nevertheless, current estimates are that the program will only be able to pay out about 75% of promised benefits in 2033, unless changes are made. MarketWatch has more on the Chained CPI Developments.
Cars for Aging Baby Boomers
We had to mention this popular story about baby boomers and their cars. Seems car manufacturers are making cars a lot easier and safer to drive, just in time for us baby boomers and our declining skills. Cars can now park themselves, give alerts about cars in blind spots, following too close, etc. The marketing approach: For heaven’s sakes don’t say they are for seniors, they are just “easier” to drive. See “Drive These Cars (Before They Drive You)”.
For further reading
What You Think You Know About Social Security Might Hurt You
Comments: Please add thoughts and comments below about changes to Social Security and Medicare that might help save the programs and keep them solvent – Washington could use a few good ideas!