Problems That Will Never Be Solved

Yahoo hit on a subject that has been happening more frequently lately and that we looked at just once, the extent to which increases in Medicare more than offset the COLA bump to Social Security. As a made up example, maybe the COLA for Social Security is $50/mo but costs for the various Medicares go up by $70/mo.

The way things have gone, there is visibility in subsequent years for this to become a bigger issue meaning that in my example of a $50 COLA, Medicare goes up by $80 in the next year and then $90 the year after. 

My own take is that Obamacare accelerated the implosion of the healthcare system and we've made no progress in all these years to actually fix it. When Obamacare was first rolling out, one of the big arguments against it was that what they really wanted was single payer like other countries. Regardless of whether you think that would be a good thing or a bad thing, it is now so fouled up that single payer might be the only option. 

I don't know whether there is any will amongst politicians or voters (in terms of majorities) for such a thing and I don't know how I feel about it, I am simply saying we may have painted ourselves into a corner on the issue. 

The article said that premiums plus out of pocket costs total 1/3 of Social Security income and 1/4 of all income. “Retirees get this because they’re writing the checks now, but those nearing retirement need to realize that this is coming up,” That's a useful quote. Gen-X needs to start to understand this. 

What happens to your financial plan if half of your Social Security goes to Medicare premiums? Maybe that sounds ludicrous, but what if that happens? Is that a big problem, little problem or no problem? For readers of this blog, maybe this threatens margin of safety. If you're reading this, you probably have some sort of investment portfolio that will kick out an income stream plus whatever you are due to get from Social Security. 

Someone counting on $5000/mo in today's dollars from their portfolio and $4000/mo from SS might have to figure some things out if Social Security actually gets cut (don't forget about that threat) and then Medicare inflation continues at a higher rate than the SS COLA. Expecting $4000 might turn into getting only $2000. 

Here's a clip on Twitter of Dr Oz saying how much the country would be helped if people work one more year. The comments were generally pretty angry in terms of saying the middle and lower classes work longer to benefit the wealthy (read them yourself and see if you take a different message). The Yahoo article talked about delaying Social Security to get a bigger benefit which is always met with angry responses on these articles. 

What is your situation? How comfortable are you about your Plan A working out the way you want it to? Do you want or think you need a Plan B or Plan C? Forget the injustices and unfairness of the system because chances are we are all going to (hopefully) grow very old and then die without any of these problems ever having been fixed. 

So if the system won't get fixed, then we need to solve our own problem and we probably need to start working on that now if you haven't started already.

Part of the solution for everyone should be health. I try to avoid broad everyone should types of comments but is there anyone who thinks they should let their health go? People do let their health go of course but I don't think anyone would say that's a good idea. 

Copilot found studies that say the average 70 year old takes 4-5 concurrent prescriptions and goes to the doctor 4-7 times per year. A few good habits can push those numbers back to 80 or maybe even older which would make the decade of 70-80 much easier and much cheaper. 

Are you going to work? If yes, what will you do, stay at your job or find something new? Will you take Social Security early or will you wait? Do you have flexibility on spending needs/wants? Should you downsize? How much are you likely to have accumulated in your accounts when you retire? It that amount just enough, more than enough, not enough? 

Those are some of the questions to consider. This will not be a fun exercise. It involves exploring what maybe has gone wrong in the past or might go wrong in the future. Confronting those sort of things doesn't sound fun but is important. 

Let's finish on a lighter note, the documentary about the ABA called Soul Power came out on Thursday.

If you're a basketball fan and don't know about the ABA, I'm halfway through the second episode and it is fantastic. It's on Prime. Then after the documentary, get the book Loose Balls by Terry Pluto. The stories are fantastic. Marvin Barnes and the time machine, the Baltimore Claws, the story behind Julius Erving going to the Nets, the Lew Alcindor story, the Silna Brothers, Connie Hawkins, Darnell Hillman, I can't tell you how much fun this is. 

The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.