Recently, I took a flight from Philadelphia to Hilton Head, and there was a couple in their sixties seated behind me. I couldn’t help but eavesdrop on their chat with fellow passengers.
They were raving about retirement, sharing how their pension and medical benefits from past corporate jobs now enabled them to travel freely and visit their grandkids whenever they pleased. They were particularly thrilled about their third home, a vacation property that they proudly mentioned was fully funded by their Social Security checks.
Good for them, right?
But isn’t that stretching the purpose of Social Security? Wasn’t this program, established by FDR back in 1935, intended to support basic needs rather than fund leisure lifestyles for retirees?
At 60, I run a small business, and by the rules, I can start claiming Social Security and Medicare benefits. If I begin collecting at 62, I’d get about $2,500 monthly, while waiting until 70 bumps that up to $5,000—excluding what my wife would get.
At 65, my wife and I can benefit from Medicare, which means free hospital insurance. Sure, there’s a premium for doctor visits and prescriptions, but it’s thousands less than what we pay now.
That’s quite a bit of extra cash just a few years away. But do I really need to own a vacation home in Hilton Head?
It’s one way to look at it, but there are other perspectives. We’re the ones who might be straining these qualification systems.
The 2024 Social Security and Medicare Trustee Reports both indicate that the combined trust funds are projected to run out by 2036.
My wife and I, well, we’re not their intended beneficiaries. When FDR started Social Security, his focus was on providing security to those most in need during tough times.
“We can never guarantee 100% of our population against risk and change, but we’ve tried to frame laws to support the average citizen and their families,” he stated.
When Medicare was introduced as part of LBJ’s Great Society initiative, it had a different aim. It wasn’t meant as charity; it was seen as a right.
“Almost every older American gets hospital care not as charity, but as a right for the elderly,” he noted when signing the bill.
But do all seniors truly need this qualification?
Not necessarily. Currently, roughly 3.2% of retirees have over a million in retirement accounts, according to a 2022 Federal Reserve survey. I suspect this figure has grown recently. Honestly, I don’t think these individuals require help either. Maybe some of us will face similar circumstances in the future, and that’s fine—we’ll apply for it if needed.
So, how do we address this funding dilemma? Those who don’t need government aid shouldn’t automatically receive it. There should be a qualification test for Social Security and Medicare. Alongside reaching a certain age, recipients should demonstrate financial need.
Just like other government assistance programs, proving need should involve submitting documents like bank statements and tax returns. If not, then support shouldn’t go their way.
But wait—aren’t we investing in these programs? Haven’t I contributed through payroll taxes? Isn’t it a bit unfair that those in similar financial situations as mine receive government support, even when they don’t need it?
Yes, it is unfair. Life rarely deals out fairness. Sometimes it works in favor of some and not others. But it’s clear that this qualification system can’t last much longer.
In the last fiscal year, combined spending on Social Security and Medicare hit about 36% of all federal spending, totaling nearly $2.5 trillion. There are many who genuinely need assistance but are left wanting because the funding is stretched thin. This raises concerns about national defense and debt, all while some retirees are living comfortably thanks to government checks at their vacation homes.
Could I refuse the money? Would I even consider returning it? It sounds good in theory, but how many would actually do it? Many are likely to use those funds for themselves, just like my fellow passengers on that flight. Too many, I’d say.
A Georgetown University survey shows that a third of employees connected to small businesses rely on Medicare. Our older employees who opt for retirement expect Social Security to cover their expenses. Will the necessity for these funds lead to higher taxes? Will it shrink other programs that benefit our business?
Or will the government simply print more money, increasing inflation and burdening us with higher borrowing rates? That seems the most likely outcome.
Nevertheless, savvy business owners recognize that there’s a way to fix the funding issues plaguing Social Security and Medicare. We can return to the initial goals of these programs. Let’s remove benefits from those who can manage without them, and redirect those resources to those who genuinely need help.
Unpopular? Perhaps. But it just makes sense.
