Letter To Governor

I also decided to write a letter to my state's governor to get the word out about how very important this issue is.

Dear Governor __________,
I am going to be a senior in high school and for my economics project I decided to research social security and other aspects of retirement. Through my research, I discovered that social security is a big issue that America is faced with today. The “pot” that holds all the deposits for social security is decreasing every year and with the baby boomers retiring, it will definitely trigger a huge drop in the amount of money saved for benefits. I also found that in the year 2041, the government predicts that they will no longer be able to pay full social security benefits to everyone if nothing is done to improve social security soon. Possible ways to combat this problem have been thrown around like increasing the retirement age, cutting back on benefits given, privatized accounts, and payroll tax cap. I truly don’t know which of these would work the best but it doesn’t seem fair at all to cut back on benefits that everyone has already put in money for. I don’t by any means expect any immediate action because this is a hard issue to solve but I hope that I helped to redirect you to the importance of social security and why everyone deserves their fair share without cutting benefits. For the presentation of my project I created a blog that detailed all of my research and interviews I conducted. If you have the time you can see my research at http://yourretirementissues.blogspot.com/. Thank you for reading, I really appreciate it!

Letter To The Editor

To help get the word out there, I emailed my local newspaper for a letter to the editor section. Hopefully after reading this letter people will realize what a big issue social security is and how it will affect them. (It had to be under 200 words which is why it's so short)

One of the biggest issues that our society is facing is social security. The government predicts that they’ll no longer be able to pay all scheduled social security benefits by the year 2041. This is ridiculous seeing as mostly everyone devotes part of their income to social security hoping that they’ll be able to reap the benefits later in life. However, given this new prediction, many of us may not be able to access this money that we were promised. The government has been toying with possible solutions including raising the retirement age and cutting benefits, but I see none of these helping the people really. Hopefully the upcoming election will produce a candidate with answers to our social security problems.

Social Security and Presidential Candidates

In honor of the upcoming presidential election, I’m going to post what Obama and McCain think on some issues relating to social security in hopes that it will help you get to know the possible solutions better and the candidates.

Social Security Privatization-Having a portion of people’s social security payments put into the stock market. (Introduced by President George W. Bush)

John McCain: After many quotes that contradict themselves one can assume that McCain does supports social security privatization but doesn’t use the term to possibly avoid support Bush’s ideas.

Barack Obama: He does not support privatized social security at all because it puts people’s retirement plans on the line by risking it on the stock market.

Payroll Tax Cap-People with incomes of less that $102,000 will pay tax on all of their money but people who exceed that income will pay only for the first $102,000.

John McCain: He does not support tax increases for anyone but if it is needed he will find a compromise that is suitable.

Barack Obama: He want to get rid of the cap so that social security doesn’t favor the wealthy by not having them pay their fair share.

Social Security Retirement Age-Proposed raise to retirement age from 65 to possibly 68 or 72.

John McCain: He supports the possible raising of retirement age because it goes with his plan to improve social security.

Barack Obama: He doesn’t support raising the retirement age because he feels it’s not fair to hardworking citizens when other options to help social security are out there.

Retirement and Economics

To tie in my project to economics, I have chosen some words that connect the two.

Opportunity Cost-Value of the option given up in favor of another “What you give up”.
Citizens that pay for social security and Medicare deal with opportunity cost because they give up some money in hopes of receiving their fair share of monetary help after retirement. The opportunity cost of social security and Medicare is having less money to themselves.
It can also work both ways for the government. The government’s opportunity cost of social security and Medicare is having less money to spend on other areas.

Cost-Benefit Analysis-Analysis of the potential benefits of an action vs. the potential costs.
People paying for social security and healthcare might do cost-benefit analysis on the matters. They may go over it and see that the benefits of investing in social security and healthcare is an easier retired life, money wise, while the cost would be the money they pay with each paycheck now.

Inflation-A general rise in the price level or a general decline in the purchasing power of the dollar.
Inflation is not helping the social security situation at all. The rising prices are making it hard for senior citizens that are getting less money than they were when they were working, to go about paying for expenses. Because of this, they need more and more money from the government to keep up. This poses a problem because the government can only give so much unless they ask for more and more out of the working people.

National Debt-Total accumulated yearly deficits of the U.S. government.
Since the U.S. is already heavily in debt, it’s even harder to solve the social security and Medicare issues. We don’t have the excess money to help out the senior citizens more so a better plan needs to be devised so that we can control this problem but not put us even more in debt.

Collective Goods and Services-Things that benefit large groups of people provided by the government.
The government provides services that will benefit the people which include social security and Medicare.

Socialism-An economic system in which most businesses are owned and operated by the government.
Social security is a form of economic socialism because the government controls it and helps not only the elderly but also the needy and disabled. Socialism is all about putting people on and even field and helping everyone and social security was established for everyone’s benefit.

Helpful Hints

Now that you’ve been informed about the basics of retirement and heard true stories from people, I will give you some helpful hints on how to save up and prepare for retirement.

·Plan it out! Don’t approach retirement not knowing much.

·Know how much income you’ll need when you retire. Make sure the money you will have coming it will balance out or exceed what is necessary. Tally up your expenses and see how much in total you’ll need.

·After looking ahead and how much is needed, you may come up short. To combat this you might cut back on your spending now so you can save even more for retirement.

·Retire later so you can maximize contribution to your funds.

·Continue with a part time job after retiring, to add more to your pocket.

·Invest some of your money in stocks to help your money grow

·Put money in a special investment fund that withdraws a certain amount for you so you don’t have to worry about withdrawing too much.

Also, this website has a number of tools that will help you plan out your retirement before you reach that age.

https://personal.vanguard.com/us/planningeducation/general/PEdGPPlnToolsRetirementPlnContent.jsp

Interviews

I interviewed a twenty-seven year old and a twenty-eight year old on the matters of social security and other retirement concerns. Even though they aren’t near the age of retirement yet, they still ranked it pretty high on a list of worries choosing from money for retirement, money for health costs of accident or serious illness, money to maintain standard of living, normal medical costs, and college tuition costs. It impressed me that they were thinking that far ahead in their lives because as we know social security is one of the biggest concerns in our society today. What disappointed me was the fact that one of them said they predicted they’d rely on social security the most after retirement. Since social security is not made to be depended on the most after retirement, it is a mistake for people to anticipate it being their main source of money. I also found that both of them did not know that the government predicts they’ll no longer be able to pay full social security payments starting in 2041. This worried be because I feel that even if you’re not near the retirement age, you should know and keep track of it. In thirty-three years they will be approaching retirement age when the predicted social security cut is scheduled. One even predicts that they’ll retire around the age of sixty, which poses problems with the stunted social security checks. Who knows, maybe by then the government will have increased the retirement age and they won’t be able to retire that early. I also found that they also don’t feel confident about the money for retirement that they have already saved.
When asked to elaborate on the issues I discovered that they admit they don’t know enough about social security. But they both feel that the government needs to be doing more to help its citizens because they pay every paycheck in hopes of being able to access that money later but if these cuts do happen, they won’t be able to use the money that they have given up for so many years.

Next, I interviewed a forty-six year old and a forty-seven year old. To them, money for retirement was their number one concern because they are soon to be approaching retirement age. They both did not predict that social security would be their leading source of money, which I was happy with. They put down savings and pension which is what the government hopes all citizens will do. They both heard about the social security cuts that the government has predicted so I thought they were more prepared than the twenty year olds because of it. Also, they predicted that they’d retire at a later age than the twenty year olds, which I found more accurate because if anything, the age of retirement will go up in the future. They both agreed, though, that the government isn’t doing enough and it is a scary thought that social security benefits might be shrunken. They had the same thought as the twenty year olds that it is unfair to cut social security benefits because they have been paying with every paycheck and to be denied their full amount is ridiculous.

Lastly, I interviewed two retired women ages seventy-seven and seventy-nine. One admitted that she thought she was living comfortably as a retiree, while the other said she was not. The woman that was not was most concerned with money to maintain her standard of living because of the rising costs. She told me that depends on social security the most so I informed her that social security was not meant to be the most important monetary income by the government. She said the reason she depends on it the most was because she didn’t save up enough for retirement. She uses every penny she has and the small amount that she did save for retirement has been used for necessary costs. She expected that retirement would yield and easy going, relaxed life, but instead, she’s constantly finding ways to save and make her money go a longer ways. After paying rent for her low-income housing, utilities, and the high cost of food, there is not much else to spare. Also, due to high medical bills because of old age and inflation, she has nothing to save. I was astounded when she said that she had to pay more than $250 for prescription drugs alone! She also commented on the government and the issue, calling the situation terrible and unfair to people who diligently pay their taxes expecting their share of social security benefits when they retire. The other woman I interviewed claimed that she was living comfortably in retirement. She worked for until she was seventy-five so she had more benefits than the previous woman who only worked until age sixty-two. She depends on pension the most and says that she did save enough for retirement. Ideally this is the kind of retired life that we all want but sometimes it doesn’t work out for the better as in the previous case. The comfortably retired woman said that she has a good deal on her pension that gives her the average payment of three years of employment. She said that social security does help but pension is still her main source. When I asked her how she felt about the government predicting that they’ll no longer be able to pay full social security benefits in the year 2041, she disagreed and had a more optimistic outlook. She said that no one can look that far in the future but also is confident that the government will do something about it before it becomes a reality.

Medicare and Medicaid

Medicare is a program to help elderly with medical costs while Medicaid more specifically deals with low-income elderly or financially needy people. Medicare and Medicaid were designed to help retirees with costs of medical bills due to the assumption that most elderly people have higher medical bills. Medicare is a federally run program that goes hand in hand with social security. When you are working, some money is deducted for Medicare so when you retire you will have those benefits to look forward to. The rules for Medicaid, however, differ from state to state. Medicare insurance helps to cover hospital stays, post hospital stays, home health care, doctor and laboratory costs, out patient services, and prescription drugs. Medicaid fully covers other costs that Medicare doesn’t such as eyeglasses, and diagnostic and preventive care. For Medicare, you must pay a certain percentage for the different medical bills you receive but not all. For Medicaid some states will charge small amounts for some services. Basically Medicaid is a cheaper version of Medicare.

Healthcare seems to be more important than social security to everyone because it pertains to your individual health. Although it is the bigger problem, most politicians seek to tackle the raging social security issue rather than healthcare because it is just too difficult to solve. Because of the rising healthcare costs, politicians need to do something to end this problem, but each solution comes with its own fault.

Possible solutions include cutting payments to doctors and hospitals from Medicare. This poses a problem because if costs are cut, doctors and hospitals may refuse service to patients of Medicare like they have already been doing with some Medicaid insured citizens.

Another solution is to increase the amount that is taken from senior citizens to help cover Medicare costs. However, senior citizens cannot afford to pay more because of inflation and other rising costs.

A third is cutting back on what treatments are given to patients insured with Medicare by refusing to provide some high tech and expensive procedures. This worries people because some feel like it’s giving the elderly second-rate healthcare, which doesn’t seem entirely fair.

Medicare could possibly restrict eligibility by increasing the benefit receiving age to sixty-seven instead of sixty-five. It would save them billions of dollars but some politicians are pulling in the other direction saying that healthcare should be available earlier for people who have health coverage from their jobs.

Another option is to use a free-market to help costs. Insurance plans, hospitals, doctors, and prescription drugs would all compete to lower costs. This poses a problem though, because using this HMO (health maintenance organization) system, the government has to pay more per citizen than for one just insured by regular Medicare.