RetirementRevised

Covid-19 had taken the lives of 181,000 people in nursing homes, assisted living and other long-term care facilities ….. one-third of the national total. The troubles have intensified a spotlight on long-running questions about how communities can do a better job supporting people who need care but want to live outside an institutional setting.

I explore these questions in a new New York Times Retiring column posted this weekend. I interviewed a couple dozen experts for the story in areas ranging from health care to housing, urban planning and health care. I’m planning a series of podcast follow-ups to dive deeper into different aspects of the story.

My podcast guest this week is one of those experts. Anne Tumlinson is one of the nation’s top authorities in public policy on caregiving, having worked for years on Capitol Hill and in the private sector as an analyst, researcher and consultant. She is the founder of ATI Advisory, a Washington, D.C.-based research and advisory services firm that works to reform health and long-term care delivery and financing for the nation’s frail and vulnerable older adults.

But she also is the founder of Daughterhood.org, a fascinating national network of support circles for caregivers. Earlier in her career, Anne worked as a healthcare advisor to the late Congressman John Lewis (D-GA), and then as the lead for Medicaid program oversight at the Office of Management and Budget.

I asked Anne for her thoughts on the challenges people face when they need to make caregiving decisions for loved ones, most often on short timelines and without adequate preparation or knowledge — and, how that affects the choices that need to be made between institutional and home-based care.

Listen to the podcast by clicking the player icon at the top of the newsletter. The podcast also can be found on Apple Podcasts, Spotify and Stitcher.

Biden’s big bet on expansion of home-based care

My New York Times column notes that the recently-approved American Rescue Act contains a very large ($12.7 billion) increase in federal spending on home and community-based services through the Medicaid program. Moreover, the $2 trillion infrastructure plan proposed by the Administration this week includes an addition $400 billion over eight years to bolster long-term care outside of institutional settings.

Howard Gleckman notes in a Forbes.com post that this latest proposal is an important step forward - but that it does nott address the nation’s broader long-term care problems:

It focuses on only one piece the puzzle—Medicaid HCBS. And it still won’t provide sufficient services for many older adults and younger people with disabilities who rely on Medicaid for their care. It doesn’t boost funding for a long list of non-Medicaid federal programs that are critical to those living at home. And it does nothing at all for middle-income Americans who are unable to pay for long-term care insurance but are not poor enough to qualify for Medicaid.

The rest of the Washington agenda on retirement

Congress recently rescued the retirements of more than 1 million workers who faced the prospect that the pensions they earned and had been promised might evaporate. The American Rescue Act allocated $86 billion for grants to struggling multiemployer pension funds that would allow them to continue paying full benefits. The law authorizes the Pension Benefit Guaranty Corporation (PBGC) to make the grants, which do not need to be repaid.

The generosity of the move came as a surprise. Previously, Democrats had been pushing a package of low-interest loans to aid the multiemployer funds, while Republicans wanted to boost insurance premiums paid by employers, add new premiums paid by plan participants, and force more conservative accounting assumptions.

But the Democratic majority is looking at things a bit differently this year. And so long as Congress is casting a benign eye on the well-being of these pensioners, I have a short list of other “must-do” retirement items for the consideration of lawmakers. And these are reforms that will impact a much larger - and more demographically diverse - group of retirees now and in the years ahead than the multiemployer plan fix.

My list includes:

* Expansion of Social Security

* Reduction of the Medicare eligibility age

* Fixing long-term care insurance

* Building affordable senior housing

Learn more in my Reuters column this week.

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This week on the podcast, we consider the most urgent retirement-related issue facing the new Biden administration and Congress: Medicare’s solvency problem.

The problem has to do with just one part of Medicare - Part A. That’s the Hospital Insurance Trust Fund, which pays for hospital bills. Unlike other parts of Medicare, Part A is funded mainly through the Medicare payroll tax; parts B and D are financed through a combination of general government revenue and premiums paid by beneficiaries.

The Medicare trustees projected last year that Part A will become insolvent in 2024 — less than three years from now. Just last week, the Congressional Budget Office forecast a somewhat longer insolvency date due to an improving economic outlook - 2026. But we’ll have to wait to see what the Medicare trustees have to say a bit later this year - they don’t always agree with the CBO projections.

Joining me on the podcast to talk about Medicare solvency is Dr. Gretchen Jacobson. Gretchen is vice president for Medicare at The Commonwealth Fund, a foundation that focuses on health care. She’s a top expert on Medicare, holding a Ph.D. in health economics, and having also worked for a number of years on Medicare policy at the Kaiser Family Foundation before joining Commonwealth.

Commonwealth recently published a really interesting series of blog posts by Medicare experts outlining proposals to solve the Part A problem, which I recommend. For this conversation, I asked Gretchen to walk us through all the options for fixing Medicare’s finances.

And a note for listeners: I taped this interview before the CBO projection was issued - so the context of our conversation is a 2024 insolvency date.

Listen to the podcast by clicking the player icon at the top of this page. The podcast also can be found on Apple Podcasts, Spotify and Stitcher. 

Here’s my recent Reuters column on Part A solvency.

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You’re subscribed to occasional posts sent to my free list. Sign up for the paid edition to receive my weekly in-depth report, plus online access to my series of retirement guides.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

When it comes to “getting what’s yours,” Philip Moeller is the man.

Phil is the principal author of the Get What’s Yours series of consumer guides, which already includes best-sellers on Social Security and Medicare. His latest book was published this week, titled Get What’s Yours for Health Care: How to Get the Best Care at the Right Price. The theme of this volume: consumers have the power to fight back when it comes to health insurance and the health care system.

Close readers know that I’m a skeptic when it comes to the value of consumerism in health care. But I respect Phil’s work tremendously and he is among the most knowledgeable writers I know on Social Security and Medicare - so a podcast chat about the new book seemed in order.

On this week’s program, Phil and I discuss the concept of consumerism in health care, and the key barriers people face navigating the system. We also explore related issues in Medicare, including the challenges of shopping insurance marketplaces and the complexities of transitioning to Medicare from other forms of health insurance.

Along with his books, Phil has written about Social Security, Medicare and other retirement issues for the PBS NewsHour in his “Ask Phil” column. He also has been a research fellow for the Center on Aging & Work at Boston College. Phil is a former contributor to Money magazine and U.S. News & World Report. His blog can be found here.

Listen to the podcast by clicking the player icon at the top of this page. The podcast also can be found on Apple Podcasts, Spotify and Stitcher.

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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

This is the last newsletter and podcast of the year, and with the holidays upon us, I thought it would be fun to wrap up with something a little different and uplifting, after the awful year that was 2020.

So - how about a little holiday music from the country’s largest choral group for singers over age 55?

Encore Creativity is the nation's largest choral organization for older adults. Based in Maryland, Encore has 15 chorales and six rock and roll choruses in the metropolitan Baltimore-Washington area, as well as a chorale in New York City.

The organization is led by Jeanne Kelly, a professional vocalist, performer, teacher, conductor and music administrator who started the group in 2001. Encore got its start when Jeanne was approached by Dr. Gene Cohen, the well-known pioneer researcher on creativity and older adults. Cohen, who died in 2009, was a founder of the national movement around positive aging, and he argued against the old stereotypes that aging leads to an inevitable decline in physical and mental capacity. 

Cohen wanted Jeanne to start a choral group for older people as part of a landmark research project he was conducting. It would examine how older adults would be affected if they had the chance to study choral music under a professional conductor. So Jeane agreed to start a group. 

The study found a wide array of positive effects - better physical health, fewer doctor visits, less use of medication and fewer falls. And the singers reported better morale and less loneliness.

One thing led to another, and Jeanne Kelly is still at it today. Encore Creativity has grown tremendously over the years, with around 800 singers participating in more than 20 programs. Most of them are up and down the east coast, but there are some affiliated programs elsewhere. These are no-audition groups - everyone is welcome - which is amazing considering the quality you will hear in the music on the podcast.

This year, of course, the pandemic forced Encore to adapt - all of its programs went  virtual, which presented some challenges. But their work is coming to fruition with the group’s first virtual holiday concert, which Encore produced along with AARP. That debuts this evening - December 17th at Encore’s website. But it will be available on demand throughout the holidays at that web address.

On the podcast, you’ll hear excerpts from Encore’s 2019 Kennedy Center performance. I hope you’ll give it a listen - and tune in to the entire program tonight or during the holidays.

Listen to the podcast by clicking the player icon above; the podcast also can be found on Apple Podcasts, Spotify and Stitcher.

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Six Social Security fixes that should be on Biden’s agenda

President-elect Joe Biden will be plenty busy battling the pandemic when he takes office next month, and Social Security will likely not be on top of his agenda. But nudging higher reforms for Social Security, our most important retirement program, would be a very smart move.

The role of this safety net program has never been more important as the country attempts to dig out from the COVID-19 disaster. In my new Reuters column, I list six Social Security moves the new president and Congress should make.

The vaccines

Medicare will cover the cost of all FDA-approved vaccines. All Americans — whether they get their health care from Medicare, Medicaid or private insurance, or they do not have coverage — will be able to get a COVID-19 vaccine at no cost, under federal rules.

Vaccine rollout in nursing homes faces obstacles and confusion. Walgreens and CVS staff will soon begin vaccinations at tens of thousands of long-term care facilities. Some staff and residents are wary, and there are thorny issues of consent.

Trials went well, but reassuring older adults remains a challenge. The two leading coronavirus vaccines seemed to work well in elderly trial volunteers. “I just can’t understand why people are afraid,” one 95-year-old said.

Should you be worried about allergy problems? British health officials recommended that people with severe allergy reactions not be given the vaccine. Such reactions to vaccines are rare, even in people who have allergies to food or bee stings.

Facebook has overhauled its approach to harmful Covid-19 health misinformation, announcing major changes that would send a much stronger message to users who have interacted with harmful falsehoods about the virus.

Retirement security, women and COVID

Researching my recent story for The New York Times on how retirement security for women is impacted by COVID, I discovered MomsTown, a very interesting network for women that has launched a series of daily podcasts. The latest episode features RISE, a scholarship program committed to accelerating equity for moms of color. Check it out here.

Recommended reading

The Labor Department completed the Trump administration’s fiduciary rule for retirement accounts, but it likely will be revised by the new administration . . . Trump’s $200 Medicare discount card may soon be in the mail . . . How Biden could help older workers . . . Nobel laureate Robert Merton on annuities, reverse mortgages and the key design principles of good retirement . . . Scientists reassess the need for routine medical care . . . 2020 was especially deadly, and COVID wasn’t the only culprit . . . Pandemic delays regulations regarding cheaper hearing aids . . . Improving your balance to prevent falls . . . To get a good night’s sleep, you may need to make different dietary choices . . . Six predictions for retirement planning in 2021 . . . Who is to blame for the 100,000 COVID deaths in nursing homes?

Next newsletter on January 7th

The newsletter heads off now for some winter quarrantined R&R. I’ll be back with you on January 7th. Until then, I hope you have peaceful, COVID-safe holidays.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

This week on the podcast, we consider the sorry state of affairs in the world of long-term care.

The U.S. has never had good answers when it comes to insuring against the risk of a long-term care need. And now, the pandemic is raising the stakes. Costs are rising for everything from assisted living to skilled nursing facilities and home-based care. Meanwhile, the pandemic has taken the lives of more than 100,000 residents and staff of long-term care facilities. 

Where will this leave us after the pandemic recedes? Joining me is the leader of one of the country’s most important senior advocacy organizations - Max Richtman. Max is the CEO of the National Committee to Preserve Social Security and Medicare, an organization that works on a range of issues related to financial security and health. 

Max recently wrote an op-ed for The Hill on one aspect of the long-term care crisis - that is, his view that we need a federally-sponsored long-term care insurance program. I invited Max to join me on the podcast to talk that idea through, and how the debate on this topic is shaping up in Washington.

Click the player icon at the top of the page to listen to the podcast, which also can be found on Apple Podcasts, Spotify and Stitcher.

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The “shecession” will widen the already-wide gender gap in retirement security

Much has been written about the “shecession” this year - the fact that women have faced disproportionate job loss due to the unique impact of the pandemic on the economy. Industries where women tend to work have been hit hardest - education, health care and social services and service industries such as hairdressers, dry cleaners, dental offices and clothing stores. At the same time, women have born the brunt of increased caregiving responsibilities for children and elderly parents. Some of that reflects gender bias no doubt - but it also points to a vicious circle of sorts. Since women earn less, two-income households are deciding that the higher-earner should keep working when it becomes necessary for one to stay home. That’s just rational economic decision-making.

Less appreciated is the way the shecession will impact retirement down the road for women now in their prime working years. The chart above comes from a calculator developed by the Center for American Progress that allows you to run “what if” scenarios and illustrate the impact on lost wages, wage growth and retirement benefits over the longer arc of your working life.

One recent study by a trio of economists found a disproportionate decline in employment for women of prime working age (25 to 55) compared with men - and especially so for women who have children.

“My concern is that the ‘motherhood penalty’ is being exacerbated by the pandemic and could even unravel some of the progress women have made relative to men in the labor market over the past few decades,” says Robert Fairlie, a professor of economics at the University of California, Santa Cruz and a co-author of the study.

Jobless rates for women have spiked significantly since last fall, when the pandemic prevented most school districts from opening safely. Four times as many women as men dropped out of the labor force in September alone, according to CAP.

“A lot of women had been holding on until September, but when most schools only opened virtually, it became really crushing and too much to manage,” says Colleen Curtis, chief community officer at The Mom Project, a job marketplace that connects family-friendly employers with working mothers. 

In my latest “Retiring” column for The New York Times, I look at the retirement risk facing women - and what can be done to mitigate it.

Single women are most at risk - a group that includes those who are widowed, divorced or never married. Federal data shows that older women are more likely to live alone than men - either because they are widowed, divorced or never married. The Elder Index, a data set from the University of Massachusetts Boston that aims to measure the capacity of older people to cover basic living expenses, shows that older women living alone have a 57 percent risk of economic insecurity, compared with 46 percent for men.

Solutions? Better support at the national level for caregiving would be very smart economic policy. That’s because it would make it so much easier for workers to balance careers with caregiving demands. Legislation promoting pay equity also is important, along with Social Security reforms that focus on boosting benefits for women also can play a critical role.

Some reforms to the retirement saving system also make sense - boosting the ceiling on catch-up contributions for late-career workers, for example. But these seem less important than the ones mentioned above.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

Healthcare costs are rising at several times the rate of general inflation, and it’s one of the major financial challenges that retirees face as they struggle to maintain their standard of living. Nowhere is this more clear than in the annual interplay between the Social Security cost-of-living adjustment (COLA) and Medicare Part B premiums.

Last month, Social Security announced a 1.3% COLA for 2021. That’s a very meager increase, but it looks worse following Medicare’s announcement last week that the monthly standard Part B premium will rise $3.90, to $148.50. If you’re enrolled in both Social Security and Medicare, the Part B premium is deducted from your benefit, so its interplay with the COLA is important.

The impact varies depending on your Social Security benefit amount, as the chart below shows. For people with very low benefits, Medicare eats up most or all of the COLA; in cases where the Part B hike would be larger than the COLA, the Social Security benefit is unchanged due to the “hold harmless” provision in federal law, which prohibits any decrease in benefits.

This year’s Part B premium was on track to rise much more than $3.90 per month, but a COVID relief measure passed by Congress recently capped the increase at 25% of whatever it would have been if Medicare simply followed the usual formula. 

Joining me on the podcast this week to walk through the changes for 2021 is Mary Johnson. Mary is the Social Security and Medicare policy analyst for The Senior Citizens League; she’s been tracking the COLA for more than 25 years, and knows this topic inside and out.

Mary points out that we’re really in an unprecedented situation with regard to COLAs. Over the past decade, we’ve had zero COLAs three times, and one year where the increase was just three-tenths of a percentage points. Over a 12-year period, the COLA has averaged just 1.4%. “Twelve years is about one-third of the length of time a person spend in retirement,” she says, “So that is having a significant impact on the lifetime retirement benefits you receive from Social Security.”

Listen to the podcast by clicking the player icon above. The podcast also can be found on Apple Podcasts, Spotify and Stitcher.

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Medicare marketplaces really don’t work very well

Every fall, you get the barrage of messages. It starts with the Annual Notice of Change document that Medicare sends, listing the changes in your current Part D or Advantage plan coverage. Then there’s the “Medicare & You” handbook containing detailed information about plan options. A flurry of email alerts urging you to shop your coverage using the Medicare Plan Finder website also go out each fall.

Insurance companies flood the airwaves and mailboxes with advertisements and brochures. Journalists like me nag you about this with our columns and newsletters!

None of it is working very well. A new study by the Kaiser Family Foundation finds that 57 percent of Medicare enrollees don’t review or compare their coverage options annually, including 46 percent who “never” or “rarely” revisited their plans. Strikingly, two-thirds of beneficiaries 85 or older don’t review their coverage annually, and up to 33 percent of this age group say they never do. People in poor health, or with low income or education levels, are also much less likely to shop.

Why? Tricia Neuman, a co-author of the Kaiser report, sums it up:

“A large share of the Medicare population finds this whole task pretty unappealing, and they just don’t do it. That raises questions about how well the system is working.”

If you’re enrolled only in Original Medicare with a Medigap supplemental plan, and don’t use a drug plan, there’s no need to re-evaluate your coverage. But Part D drug plans should be reviewed annually. The same applies to Advantage plans, which often wrap in prescription coverage and can make changes to their rosters of in-network health care providers. Plans can change the monthly premium as well as the list of covered drugs - and they can change the rules around your access to drugs, or impose quantity limits or require prior authorizations.

The findings call into question just how well privatization of Medicare is working - if you don’t have willing, tuned-in buyers, how well can a marketplace really work?

I explore that question in my latest Retiring column for The New York Times, which was published today.

Along with the column, here are a few more thoughts on this topic:

Medicare has not always been this way: At its creation in 1965, Medicare was envisioned as a pure social insurance program, with everyone paying in the same amounts and receiving the same coverage. But with the expansion of drug coverage in 2003 and the rapid growth of Medicare Advantage, we’re headed toward a system of marketplaces with the original program increasingly looking like a public option. Advantage is projected to account for 64% of enrollment by 2028, according to Avalere Health:

A different approach is possible: A standard benefit in Medicare, funded through premiums and payroll taxes, would work just fine - especially if we change the law to permit the federal government to negotiate drug prices, just as the VA and Medicaid can do. That’s prohibited under the law that created Part D. What sense does that make?

Human behaviorand choice: The Medicare marketplace is a key example of the choice-driven ideology that has driven so much of our retirement system over the past four decades. We have shifted decision making and risk from the sponsors of benefit plans to participants - the poster child being the move from defined benefit pensions to defined contribution 401(k) plans. We know how well that is working - 401(k) account balances are concentrated among the wealthiest households, participation is flat and the decline of DB pensions has taken a huge bite from overall retirement security (see my write-up of the latest Federal Reserve data on retirement saving accounts in this recent newsletter edition).

All of these systems are wrapped up in ideology about competition and consumer choice. When will we wise up? It’s been proven over and over again that the best way to deliver retirement security to the majority of households is through our social insurance programs, so let’s beef them up, make them less complicated and as universal as possible.

Still time to shop this year

Here’s my last reminder of the year to revisit your Part D or Advantage coverage this fall. There’s still time - enrollment runs until December 7th.

Get assistance from your local State Health Insurance Assistance Program, the federally funded counseling service that provides free one-on-one assistance in every state; (use this link to find yours.)

The Medicare Rights Center offers a free consumer help line: (800-333-4114.)

You can browse plans on the Medicare Plan Finder, the official government website that posts stand-alone prescription drug and Medicare Advantage plan offerings. The plan finder now allows users to sort plans not only by premiums but for total costs, including premiums, deductibles, co-pays and coinsurance payments.

When it comes time to enroll, call Medicare to sign up at 800-MEDICARE (800-633-4227) and to ensure that your enrollment has been processed.

Social Security and retirement timing in the age of COVID: My discussion with Jean Chatzky on Facebook Live

Personal finance guru Jean Chatzky invited me to join her this week on Facebook Live to talk about Social Security, retirement timing and the pandemic. Jean conducts a great interview, and we spoke at length about how COVID-19 has impacted retirement planning, and altered Social Security claiming - you can listen to a replay here.

Join me for a panel discussion on the future of retirement

I’ll be joining a panel discussion next week on the pandemic’s impact on the outlook for retirement within workplace plans a bit later this month, moderated by my Reuters colleague Lauren Young. Also on the panel are Christine Benz of Morningstar, economist Teresa Ghilarducci, Kedra Newsom Reeves of Boston Consulting and Harry Dalessio from Prudential Retirement.

The session will be convened on Monday November 16th at 1pm eastern time. Registration is free, and the conversation will be provocative, so please join us (register here).

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

This week on the podcast, we take a look at how financial planning for retirement may change as a result of the pandemic. I invited Christine Benz of Morningstar to join me for this discussion after she published a thought-provoking essay on this question on the Morningstar website.

Christine is Morningstar’s director of personal finance, and she is one of the country’s top researchers and writers on personal finance and planning. From her vantage point at Morningstar, she has access to a wealth of top-notch analysis, research and data on investing, saving and other aspects of planning.

Christine thinks the pandemic has produced a sudden - and significant - shift in how individuals think about spending and saving goals, the possibility of an unplanned early retirement, setting aside liquid emergency funds, paying for health care and dealing with the current low yield environment for fixed income investments.

Listen to the podcast by clicking the player icon at the top of the page. The podcast also can be found on Apple Podcasts, Spotify and Stitcher.

This week on the podcast, we take a look at how financial planning for retirement may change as a result of the pandemic. I invited Christine Benz of Morningstar to join me for this discussion after she published a thought-provoking essay on this question on the Morningstar website.

Christine is Morningstar’s director of personal finance, and she is one of the country’s top researchers and writers on personal finance and planning. From her vantage point at Morningstar, she has access to a wealth of top-notch analysis, research and data on investing, saving and other aspects of planning.

Christine thinks the pandemic has produced a sudden - and significant - shift in how individuals think about spending and saving goals, the possibility of an unplanned early retirement, setting aside liquid emergency funds, paying for health care and dealing with the current low yield environment for fixed income investments.

Listen to the podcast by clicking the player icon at the top of the page. The podcast also can be found on Apple Podcasts, Spotify and Stitcher.

Not a subscriber yet? Take advantage of a special offer

Sign up now for the free or subscriber edition of the newsletter, and I’ll email a copy of my latest retirement guide to you. This one looks at dealing with the Social Security Administration during the COVID19 crisis.

Customer service at the Social Security Administration has changed during the coronavirus crisis - the agency closed its network of more than 1,200 field offices to the public in March.

Just a reminder- subscribers receive the full edition of the newsletter (the free version is abridged), and they have access to the entire series of guides at any time. Click on the little green button to subscribe, or go here to learn more.

Older volunteers forge new pathways in the pandemic

Volunteers are the lifeblood of nonprofit organizations, but the pandemic has created major barriers to participation, especially for older people, who face a higher risk of serious illness or death if they contract the coronavirus. As a result, nonprofit organizations and volunteers are grappling with the challenge of finding new, safe ways to engage with older volunteers. Learn more in my latest story for The New York Times. Be sure to check out the comments on the story, available via a link at the bottom of the article if you are viewing it in a web browser and logged on to the site.

The story is part of a broader section on retirement that the Times published online this month - you'll find several other interesting stories on topics like entrepreneurship in retirement, where retirement is headed in the pandemic and more.

Open enrollment: Original Medicare or Advantage?

Medicare’s open enrollment season is underway, and a key decision point is whether to use Original Medicare or Medicare Advantage. Premium newsletter subscribers can review my guide to choosing between Original Medicare and Medicare Advantage here.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

Every fall, you have an opportunity to review your Medicare coverage during the open enrollment season that runs from Oct. 15 through Dec. 7.

This is the only chance most enrollees get to switch between original fee-for-service Medicare and Medicare Advantage, the all-in-one managed care alternative to the traditional program. You also can re-evaluate your prescription drug coverage — whether that is a stand-alone Part D plan, or wrapped into an Advantage plan. It’s a good opportunity to make sure you’re getting the coverage best suited to your health care needs, and perhaps to save some money on premiums and other out-of-pocket costs.

Joining me this week on the podcast this week to discuss fall enrollment is one of the nation’s top Medicare consumer advocates - Frederic Riccardi, president of the Medicare Rights Center. I asked Fred to talk about why the fall enrollment is so important for Medicare enrollees, how to reevaluate your prescription drug or Medicare Advantage coverage and the recent trends in plan offerings. I also got Fred’s tip on the smartest way to select coverage.

Listen to the podcast by clicking the player icon at the top of this page. The podcast also can be found on Apple Podcasts, Spotify and Stitcher.

Also check out my Morningstar column this week on fall enrollment.

Not a subscriber yet? Take advantage of a special offer

Sign up now for the free or subscriber edition of the newsletter, and I’ll email a copy of my latest retirement guide to you. This one looks at dealing with the Social Security Administration during the COVID19 crisis.

Customer service at the Social Security Administration has changed during the coronavirus crisis - the agency closed its network of more than 1,200 field offices to the public in March.

Just a reminder- subscribers have access to the entire series of guides at any time. Click on the little green button to subscribe, or go here to learn more.

How fees impact your retirement savings over time

Investment fees often don’t sound like much - what’s a 1% annual fee, after all, considering all the great returns you’ll be earning. Butthis thinking is dangerous. Compound interest works in your favor on the investment side of the equation - and works just as powerfully on the expense side. Fees compound over time, hindering growth and accumulated saving.

Pew Trusts built this nifty calculator that allows you to run scenarios on your own accounts. Get your most recent statement out and give it a whirl - and consider whether you could do better by slashing your fees (translation: low-cost passive index funds or ETFs).

Open enrollment: Original Medicare or Advantage?

Medicare’s open enrollment season is underway, and a key decision point is whether to use Original Medicare or Medicare Advantage. Premium newsletter subscribers can review my guide to choosing between Original Medicare and Medicare Advantage here.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

This week on the podcast, I examine Democratic presidential candidate Joe Biden’s plan to reform Social Security, with the help of economist Richard Johnson of the Urban Institute.

Rich is the co-author of a new Urban Institute report on Biden’s plans for both Social Security and Supplemental Security Income, which provides cash benefits to low-income older adults and people with disabilities. The report relies on DYNASIM, a sophisticated economic model that the Urban Institute has been using since the 1970s to projects the size and characteristics of the U.S. population 75 years into the future.

Why focus only on the Biden plan, and not President Trump’s? You could well ask that about Johnson’s analysis - or about this podcast. And the answer is simple - there is no Trump campaign plan for Social Security. So before we get into the Biden plan, I want to offer a few thoughts on what it’s been like to cover retirement policy in what I think it’s fair to call a very asymmetrical election year. 

The Trump campaign hasn’t offered up detailed policy ideas on Social Security, or really, much of anything else. There’s no GOP platform either - something that typically comes out of a political party’s convention. We do know the history of Republican legislative proposals on Social Security. They typically call for restoring the program’s long-range financial balance by cutting benefits via higher retirement ages, less generous cost of living adjustments. But there’s nothing on the table right now to consider.

Frankly, I find any effort to make side-by-side comparisons of these two candidates to be a disservice to readers, because it implies that we’re dealing with two normal candidates who can be covered using traditional journalistic methods and tools. But there’s nothing normal about this situation - only one of the two major party candidates does normal stuff - like, proposing ideas and policies. So, on Social Security, I’m just telling you - there’s only one actual plan to cover, and it’s the Biden plan. 

And Social Security does need reform. The combined retirement and disability trust funds are on track to be exhausted in 2035 - and probably a bit sooner than that due to the pandemic. Exhaustion means there would be sufficient revenue coming in to pay only about 80 percent of promised benefits. At the same time, most Democrats and all progressives believe benefits should be expanded to improve their adequacy - that is, replace more pre-retirement income to help low and middle class retirees maintain their standard of living in retirement.

Biden has offered up a balanced plan that addresses both of these challenges. In a typical Biden approach, his plan is moderate. It doesn’t go as far as the party’s left wing would like, but it marks a shift from where Biden - and most other centrist Democrats - have stood on Social Security over the last decade. Notably, Biden’s plan is much more detailed than the typical policy offerings from presidential candidates - as you’ll learn from my  conversation with Rich Johnson.

Listen to the podcast by clicking the player icon at the top of the newsletter. The podcast also can be found on Apple Podcasts, Spotify and Stitcher.

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Sign up now for the free or subscriber edition of the newsletter, and I’ll email a copy of my latest retirement guide to you. This one looks at dealing with the Social Security Administration during the COVID19 crisis.

Customer service at the Social Security Administration has changed during the coronavirus crisis - the agency closed its network of more than 1,200 field offices to the public in March.

Just a reminder- subscribers have access to the entire series of guides at any time. Click on the little green button to subscribe, or go here to learn more.

Social Security awards a 1.3% COLA for 2021

Seniors will receive a 1.3% cost-of-living adjustment (COLA) in their Social Security benefit next year, the Social Security Administration announced. That’s a $20 monthly raise for the typical beneficiary, to about nearly $1,540.

That’s a small increase by historical standards, and it may be smaller still for many after Medicare’s Part B premium hike is netted out. We won’t have a final Part B increase amount until sometime in November, and each enrollee’s final Social Security adjustment will vary accordingly. Social Security will mail COLA notices in December that spells out your net increase. Let’s hope those arrive in a timely manner, since, you know - the Postal Service.

This year, Congress has capped the Part B increase at 25% of whatever the increase would have been - so that should help somewhat.

The maximum income subject to FICA taxes will increase to $142,800 in 2021 (from $137,700 this year).

I’ll have full analysis of this next month, after the Medicare figures become available.

Open enrollment: Original Medicare or Advantage?

Medicare’s open enrollment season begins today, and runs through December 7th. I’ll have analysis soon on the market for prescription drug and Medicare Advantage offerings for next year soon, but just a couple quick points for now:

* Review your options. Consider how you will receive Medicare benefits in the year ahead, because fall enrollment is the time when most people will be able to make changes.

* If you have Original Medicare and a Medigap and are happy with your coverage, there’s no need to makea change.

* If you have a Medicare Advantage or Part D plan, review your coverage options even if you are happy with your current coverage; plans change their pricing and benefits every year.

* Read the Annual Notice of Change (ANOC) that Medicare sent to you in September (via mail or email). This lists the changes in your current plan, such as the premium and copays, and will compare the benefits in 2021 with those in 2020.

Premium newsletter subscribers can review my guide to choosing between Original Medicare and Medicare Advantage here.

Timing your retirement

Roughly one-third of workers retire earlier than plan, research shows. The most common causes for unexpected early retirement are health problems and job loss. More Americans are planning to work longer to improve their retirement outlook; in this guide we consider those benefits, and ways to manage late-career work in ways that will help you stay in control of your retirement timeline.

Click here to download my guide to timing your retirement (subscribers only).

Choosing your Medicare coverage

Original Medicare, or Medicare Advantage?

This is the most basic decision you’ll make about health insurance at the point of retirement.

If you opt not to join Original Medicare at that time, you forego the preexisting condition protections offered in Medigap supplemental policies. Medicare Advantage can save you money on premiums, but Original Medicare remains the gold standard for its flexible access to providers and predictability of total costs over your lifetime.

Click here to download my guide to choosing Medicare coverage (subscribers only).

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com

This week, the podcast revisits a topic I wrote about for The New York Times last month - race and retirement. I’ve written before about how the inequities people of color experience during their working lives spill over into retirement. But during this time of racial reckoning, I wanted to take a deeper dive into the topic.

For the Times story, I took special care to seek out the voices of Black Americans who also are expert on this topic. That’s how I found my way to economist Darrick Hamilton. Professor Hamilton is one of the nation’s leading voices on the causes and consequences of racial and ethnic economic disparities. He recently left Ohio State University to rejoin The New School in New York City, where he is teaching and starting up a new Institute for the Study of Race, Stratification and Political Economy.

Darrick is a leading proponent of one of the most creative ideas for addressing the racial wealth gap - “baby bonds.” The idea is to provide every American child with a government-funded trust account at birth, starting with a $1,000 contribution. Kids born into lower-wealth families would receive more contributions over time, and the accounts would benefit from compound interest growth.

The premise is that much of the wealth in the U.S. is transferred from generation to generation, and there’s a powerful compound effect that starts with our legacy of racist laws and policies and ends with today’s white households able to access far more capital for wealth-building activities - attending college, buying a home or starting a business. Baby bonds could serve as a proactive remedy for that injustice, and in many cases could impact the wealth available at retirement for people of color.

In the Times story, I outline the basic numbers on race and retirement. They may not be surprising, but they certainly are appalling. 

In 2016, the typical Black household approaching retirement had 46 percent of the retirement wealth of the typical white household. For a Latino family, it was 49 percent. Two-thirds of single black retirees have incomes too low to meet basic living expenses. 

And that was before the pandemic. Since COVID19 struck, unemployment rates for older Black and Latino workers have been much higher than for their white counterparts. And mounting evidence suggestions that millions are being forced into premature retirement. That’s going to translate into sharp cuts in Social Security income and savings, and expensive disruptions in health insurance.

The baby bonds concept has caught on in the Democratic party - Senator Cory Booker advocated for it during his presidential campaign and he has sponsored baby bond legislation in the Senate. The idea also has found its way into the Biden presidential campaign.

Listen to my conversation with Darrick Hamilton by clicking on the player icon at the top of the newsletter. The podcast also can be found on Apple Podcasts, Spotify and Stitcher.

Not a subscriber yet? Take advantage of a special offer

Sign up now for the free or subscriber edition of the newsletter, and I’ll email a copy of my latest retirement guide to you. This one looks at dealing with the Social Security Administration during the COVID19 crisis.

Customer service at the Social Security Administration has changed during the coronavirus crisis - the agency closed its network of more than 1,200 field offices to the public in March.

Just a reminder- subscribers, have access to the entire series of guides at any time. Click on the little green button to subscribe, or go here to learn more.

Will FICA revenue deferral open the door to privatization of Social Security? Here’s how it could play out

I've been writing over the summer about the threat posed to Social Security by President Trump’s threat to continue deferring FICA tax collections should he win reelection. This has been a chaotic episode, with shifting indications from the White House on how a FICA revenue gap might be plugged. And most employers seem to be ignoring the deferral altogether as not worth the bother, and are continuing to collect FICA. Even the U.S. Chamber of Commerce - a staunch Trump ally - has expressed disapproval.

Trump signed a presidential memorandum in August ordering the deferral through year-end of FICA revenue, and he also said that he would push for termination altogether of the tax if he wins a second term. It’s not at all clear that he could push this through Congress, but some experts think that the IRS code might permit him to defer FICA collections for an additional year.

If we do stop funding Social Security through FICA, just about anything can happen. The concept of an earned benefit can go out the window pretty quick, and people will start thinking of Social Security as welfare.

In the political back and forth over FICA, the Trump administration has stated that any deferred FICA revenue would be replaced by general revenue funds. But that suggests a transfer of more than $1 trillion annually - a tall order for a Congress already grappling with the demands of economic support for a flagging economy. 

It also would mark a turning point in Social Security’s funding structure. The program has always been funded mainly by FICA (it also receives relatively small amounts of revenue from taxes on benefits and interest on trust fund bonds.). Self-funding has been one of the program’s political strengths, as it gives workers and beneficiaries a sense of ownership - as per this oft-quoted 1941 quip from President Franklin Roosevelt:

“We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.”

Some Republicans have not given up on the dream of converting Social Security into a system of personal saving accounts - an anchoring idea of the reforms proposed by President George W. Bush. The plan was a political and policy flop, but some on the right continue to push it, including the Heritage Foundation.

If you doubt this, check out this recent op-ed on FICA by Andrew Biggs of the American Enterprise Institute (emphasis added at the conclusion of this passage):

. . . President Trump made clear in an Aug. 12 news conference that his real goal is to replace the Social Security payroll tax with revenues drawn from the general tax fund, the vast majority of which is income taxes. This idea faces both practical and philosophical hurdles, but could help the political parties finally come together to fix Social Security.

The first problem with funding Social Security via income taxes is obvious: the federal budget is already in deficit, which means there isn’t room to fund Social Security with general revenues without significantly cutting other programs or raising income taxes. And that tax increase wouldn’t be tiny. In 2019, the federal government collected about $1.7 trillion in individual income taxes, versus nearly $1 trillion in Social Security payroll taxes. Even if the President’s plan would replace only the employees’ 6.2% payroll tax, that would mean about an additional $500 billion in general tax revenues needed.

Moreover, funding Social Security with income taxes is also contrary to the program’s history, in which benefit were funded with a flatrate tax that applied to all earnings up to a maximum, which is currently $137,700 per year. The payroll tax contributed to the view that Social Security is an “earned benefit” rather than a welfare plan.

But most Democrats have already given up on the idea of truly earned benefits, since their Social Security proposals focus on lifting the payroll tax cap and making the rich carry more of the load.

Income-tax financing would simply take that idea in a more progressive direction. While about 15% of earnings accrue to employees with salaries above the $137,700 payroll tax ceiling, almost half of total income taxes are paid by households with incomes above that level. More than one-third of income taxes are paid by the top 1% alone.

But what is in it for Republicans? The answer is that an income-tax-financed safety retirement net need not be nearly as expensive as the current Social Security program. For instance, Australia’s Age Pension costs around one-fifth of what Social Security does, because it merely supplements households’ own savings to ensure a minimum standard of living in retirement. Canada and New Zealand also use income tax-financed programs to provide a strong base of retirement income.

For this idea to work, though, the U.S. would need to follow Australia’s lead by signing up every worker for a retirement savings account with automatic contributions. Those contributions could be funded using the payroll taxes that no longer would be needed to fund Social Security.

Biggs was a deputy commissioner of Social Security during the Bush administration and he was involved in the aforementioned failed effort to convert Social Security into a system of private savings accounts. He hasn’t talked much about privatization in recent years - until now, that is:

Once transitioned into place — which admittedly would take years — the result would be higher private savings, particularly for lower-income households, which reduces wealth inequality and boosts the economy. And while income taxes would be higher, total government spending on Social Security would be lower.

To be clear, this is my plan, not President Trump’s. But for income tax-funding of Social Security to work, for it to overcome 30 years of Congressional inaction on Social Security, it needs to think creatively and offer something to both sides. Because the traditional menu of reforms — payroll tax rate increases, higher retirement ages, lower cost-of-living adjustments and so forth — haven’t motivated Congress to action.

Joe Biden has been hammering Trump on the FICA issue in television ads running in swing states. We are living in a very weird world, indeed, when the chief actuary of Social Security is quoted in a political ad.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit retirementrevised.substack.com