In recommendations likely to inspire fear among retirees, an association of corporate executives is calling for reforms to Social Security and Medicare designed to preserve the programs for the people who need it most.
Cuts to Social Security and Medicare, along with health care costs, are the top three fears of retirees, according to a survey conducted in December by Spectrem’s Millionaire Corner. Some of the reforms proposed by the Business Roundtable are designed to protect Americans who are currently ages 55 and older. Others would impact the income of anyone participating in the Social Security, and Medicare benefits for higher-income seniors.
Social Security and Medicare currently account for 42 percent of the federal budget, according to Business Roundtable, and the share is expected to grow to half by 2020. “American can preserve the health and retirement safety net and rein in long-term spending growth by modernizing Medicare and Social Security in a way that addresses America’s new fiscal and demographic realities,” Gary Loveman, CEO of Caesars Entertainment Corp. and chair of Business Roundtable’s committee on health and retirement.
The recommendations are designed to prevent Social Security and Medicare funds from drying up as anticipated. The Social Security Old Age, Survivor and Disability program is projected to run out of money by 2033, and The Medicare Health Insurance Trust fund (Part A) could be emptied by 2024, according to the Business Roundtable.
Recommendations to stabilize Social Security and Medicare programs include:
· Increase the full retirement age for Social Security from 67 to 70 for most workers, and raise the age of eligibility for Medicare to 70. These reforms would not apply to Americans who are now 55 or older.
· Base cost-of-living adjustments for Social Security benefits on the Chained Consumer Price Index. The advocacy group AARP claims the change would reduce benefits to current and future retirees by $112 billion over the next decade.
· Restrict benefit growth through formulas based on means and income to make Social Security more progressive.
· Require exempt workers – such as state employees – to participate in Social Security.
· Encourage private savings because “true retirement security will only be achieved in Americans save more.”
· Expand competition in the Medicare program to allow seniors to choose between competing plans, including private plans offering benefits similar to Medicare.
· Reduce Medicare benefits for upper-income beneficiaries, while retaining the safety net for low-income Americans.