MAGS1
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Great post as always Skye. I agree, SS and Medicare/Medicaid need an overhaul. I understand it’s a political death sentence to even mention it, BUT maybe if Congress had term limits more people would be willing to engage in the conversation since they’re not angling for reelection for 40+ years. But that’s a whole other conversation.
With regards to SS, pick an age that’s not too close to retirement age but not too young that it will be ineffective before it’s too late. Say somewhere around my age, let’s say 50 for round numbers. Anyone 50+ retains the current benefit structure, below that is where the overhaul starts. Treat it like corporate pensions that have changed over the years. For those in the under 50 group, your accrued balance and payout structure up to the overhaul date (again, let’s use 1/1/2025 for simplicity sake) remains as is under the legacy plan. Going forward starting 1/1/2025, accrual calcs and payouts are under the new plan. If there’s too many people starting at age 50, start at age 45 as of 1/1/2025 (or whatever the new plan start date is).
Now, what that overhaul looks like I’m not exactly sure, I’d leave that to those that have experience running pensions and financial planners as I’m not in the weeds on that stuff on a day to day basis. We went through something similar at my prior company, in addition to a 401K we were eligible for a corporate pension. It changed 3 times in the 17 years I was there, with the original being the most lucrative (the original was ended right before I started there). There was some moaning and groaning by folks that had been there a long time, but they had so many years under the original plan that the changes didn’t make a major impact on them. Even under the latest plan it was still pretty good but returns relied more on the market than just a defined number from the company.
I think politicians can do it, they just have to get the approach right and it needs to be well communicated (something none of them do well IMO). I believe the vast majority of people are understanding and willing to accept change if they understand 1) what the problem actually is; 2) how the changes made will help keep the system going and 3) how the changes affect them and that even though it may look different, there will still be a reliable stream of income. It just may not be enough to retire on by itself, so make sure to enroll in IRA’s, 401K’s, 403B’s, etc. as early as you can.
With regards to SS, pick an age that’s not too close to retirement age but not too young that it will be ineffective before it’s too late. Say somewhere around my age, let’s say 50 for round numbers. Anyone 50+ retains the current benefit structure, below that is where the overhaul starts. Treat it like corporate pensions that have changed over the years. For those in the under 50 group, your accrued balance and payout structure up to the overhaul date (again, let’s use 1/1/2025 for simplicity sake) remains as is under the legacy plan. Going forward starting 1/1/2025, accrual calcs and payouts are under the new plan. If there’s too many people starting at age 50, start at age 45 as of 1/1/2025 (or whatever the new plan start date is).
Now, what that overhaul looks like I’m not exactly sure, I’d leave that to those that have experience running pensions and financial planners as I’m not in the weeds on that stuff on a day to day basis. We went through something similar at my prior company, in addition to a 401K we were eligible for a corporate pension. It changed 3 times in the 17 years I was there, with the original being the most lucrative (the original was ended right before I started there). There was some moaning and groaning by folks that had been there a long time, but they had so many years under the original plan that the changes didn’t make a major impact on them. Even under the latest plan it was still pretty good but returns relied more on the market than just a defined number from the company.
I think politicians can do it, they just have to get the approach right and it needs to be well communicated (something none of them do well IMO). I believe the vast majority of people are understanding and willing to accept change if they understand 1) what the problem actually is; 2) how the changes made will help keep the system going and 3) how the changes affect them and that even though it may look different, there will still be a reliable stream of income. It just may not be enough to retire on by itself, so make sure to enroll in IRA’s, 401K’s, 403B’s, etc. as early as you can.
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