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The Security of Future Retirement Benefits: 5 Questions for Obama and Romney

The president and his GOP rival should offer their views on key retirement issues

By Larry Polivka

The state of the economy and the huge federal deficit are clearly major issues in this year’s presidential election. But so is the future of Americans’ retirement security, which has received much less attention.
 
President Barack Obama and Mitt Romney have both expressed interest in raising the Medicare eligibility age from 65 to 67, though doing so would deny coverage to those who already have great difficulty finding affordable insurance. And Romney has endorsed a Republican budget plan in Congress calling for at least partial privatization of Medicare, through vouchers.
  
(MORE: The Challenge of Long-Term Care)

But neither candidate has spoken about how he would bolster retirement savings, protect Social Security benefits and curb the escalating out-of-pocket costs of long-term care. Both men need to fully articulate their policy proposals on these important topics.
 
5 Questions for the Presidential Candidates

Below are five key questions I’d like Obama and Romney to answer so we can learn how they intend to make retirement more secure for Americans in their 50s and 60s:
 
1. How will changes in private pensions and health-care benefits affect current and future retirees?
 
Only half of all employees now have an employer-sponsored retirement plan, and 65 percent of those programs are defined contribution plans, like 401(k)s, whose value is determined by the unpredictable performance of stock and bond markets. A sharp reduction in the availability of traditional pension plans is a major reason why respected retirement analysts, like those at Boston College’s Center for Retirement Research, believe fewer future retirees will be likely to maintain a middle-class standard of living after they stop working.
 
In addition, the percentage of large firms providing workers with retiree health care coverage has declined from 66 percent in 1998 to roughly 31 percent.

2. Should the formula for annual Social Security cost-of-living adjustments (COLA) be adjusted to reduce or increase future benefit checks?
 
Some policymakers and analysts have suggested tweaking the COLA formula by replacing its inflation yardstick, the consumer price index (CPI), with something called “CPI-chained," which is designed to reflect changes in consumer purchasing behavior as people respond to price changes of products and alter their shopping habits accordingly.
 
For today’s Social Security recipient who starts receiving checks at 65, the chained CPI would result in a $560 benefit cut by age 75, according to Joan Kuriansky, executive director of Wider Opportunities for Women, a nonpartisan advocacy group, and Paul Nathanson, executive director of the National Senior Citizens Law Center.
 
Many advocates for the elderly support tying Social Security benefits to an index called the CPI-E (Elderly), reflecting the spending patterns of Americans 62 and older. This would raise COLA adjustments by giving more weight to out-of-pocket spending on health care — the type of costs that are especially burdensome for the elderly.
 
(MORE: The New Financial Outlook for Social Security and Medicare)

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3. Should the minimum Social Security payment be raised to a level that ensures no beneficiaries have incomes below the poverty line?
 
This change would be especially helpful to single women and minority Social Security recipients who are far more likely than married women and whites to spend their later years living in poverty, according to an AARP study.

4. What will you do about the rising out-of-pocket health costs for Medicare recipients?
 
These expenses now account for about 15 percent of the average Medicare beneficiary’s household budget. That’s three times the health spending among non-Medicare homes, according to a Kaiser Family Foundation report. Between 2002 and 2010 (the latest figures available), monthly premiums for Medicare Part B doubled to $110 a month, from $54.
 
5. What policies would you support to reduce the growing burden on families when one member requires long-term assistance?
 
More than 70 percent of long-term care services are provided by family members and friends — and the number of people expected to need long-term help is set to explode over the next 10 to 20 years, as I noted in an earlier Next Avenue article.
 
The Obama administration supports somewhat increased financing for the expansion of home- and community-based services.

Republicans favor block grants for Medicaid (a program restricted to Americans at or near the poverty level) at reduced levels, which would almost certainly mean less money for long-term care. According to the nonpartisan Center on Budget and Policy Priorities, under Republican House Budget Committee Chairman Paul Ryan's plan, states would receive 34 percent less in federal Medicaid money by 2022 than they would today.
 
How do Obama and Romney plan to resolve these pressing issues? As campaign season approaches full throttle, maybe we'll finally get some answers.

Larry Polivka serves as Executive Director of the Claude Pepper Center and Scholar-in-Residence with The Claude Pepper Foundation, Inc. at Florida State University. His primary research interests are long-term care, affordable health care, and economic security for America’s elderly population.  From 1989 to 1992, he was director of the Florida State Unit on Aging. Read More
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