Retirement, pensions, social security, retirement, and related matters

[Crafty_Dog]

https://www.youtube.com/watch?v=oG_b2k6O_Ao

[Crafty_Dog]

For the record, I do not agree with the final two paragraphs.


The GOP Does Want to Trim Social Security and Medicare
Biden pointed to Rick Scott’s unpopular proposal, but the RSC plan reveals more.
By William A. GalstonFollow
Feb. 14, 2023 6:20 pm ET


When President Biden said during his State of the Union address last week that “some Republicans want Medicare and Social Security to sunset,” and that “I’m not saying it’s a majority,” he was technically correct. Florida Sen. Rick Scott, head of the National Republican Senatorial Committee in 2022, laid out a plan to do this last winter. But his proposal died for lack of a second.


Other Republican senators, including Mike Lee of Utah and Ron Johnson of Wisconsin, have suggested radical changes in Social Security and Medicare but didn’t go as far as Mr. Scott. Mr. Johnson wants to eliminate these programs as entitlements and subject them instead to the annual appropriations process. But Minority Leader Mitch McConnell was right when he said sunsetting was “not a Republican plan. That was the Rick Scott plan.” So was South Dakota Sen. Mike Rounds when he said Sunday that a “vast majority” of his colleagues disagreed with Mr. Scott about the best way to fix these programs.

Mr. Biden’s focus on Mr. Scott’s ill-considered proposal, however, obscured a larger truth: The vast majority of House Republicans want to alter the structure of Social Security and Medicare in ways that would dramatically cut spending on these programs.

More than two-thirds of House Republicans are members of the Republican Study Committee, which bills itself as “the conservative caucus of House Republicans and a leading influencer on the Right.” In 2022 the RSC published a comprehensive plan to balance the budget in seven years and then begin paying down the national debt. The plan included $729 billion in spending reductions for Social Security and $2.8 trillion in reductions for Medicare over the next 10 years.


The RSC budget specified the changes that would be needed to achieve reductions of this scale. For Social Security, the linchpin is raising the normal retirement age from 67 to 70 by 2040 and then indexing the normal retirement age to changes in life expectancy. The RSC also endorsed increasing benefits for workers with lower incomes, reducing the benefits received by middle- and upper-income workers, and allowing all workers to divert a portion of their payroll taxes to private retirement options. Republicans call this last measure “retirement freedom”; Democrats call it “partial privatization.” Some of these changes are meant to affect current retirees. If they weren’t, the plan wouldn’t yield the first-year spending reductions the RSC budget clearly indicates.

The committee’s Medicare plan is more complicated, but the main thrust is the same. It proposes “aligning Medicare’s eligibility age with the normal retirement age for Social Security and then indexing this age to life expectancy.” If “aligning” means tracking the RSC’s Social Security proposal, it would require increasing the Medicare eligibility age from the current 65 to 67 by 2027 and to 70 by 2040. The RSC plan also calls for transforming Medicare into a system of premium support based on income and wealth, which it claims would cover most of the costs of health insurance for most seniors. Forcing traditional Medicare to compete with private plans would reduce seniors’ premium payments by 7%.

This number comes from a Congressional Budget Office analysis, which also estimates that moving to premium support would reduce federal spending by at most $419 billion over five years and—I estimate based on CBO’s savings projections—about $1 trillion over a decade. This is a lot of money but it’s barely a third of the total savings that the RSC projects its Medicare plan would produce. Congress and voters deserve to know whether medical providers could bear the remaining $1.8 trillion in cost reductions without impairing the availability and quality of healthcare.

Republicans’ response to Mr. Biden’s remarks may mean that changes to Social Security and Medicare are off the table for the 118th Congress. And Donald Trump’s insistence that these programs be untouched could force his challengers for the GOP presidential nomination to toe the line during the 2024 primary election.

But when serious conversations about Social Security and Medicare are able to resume, conservative budget cutters and centrist reformers must face a basic fact: Increasing the normal retirement age for Social Security and the eligibility age for Medicare would have a disproportionate impact on low-income workers. Because high-income Americans live much longer than low-income Americans, raising the threshold age to 70 would reduce the number of years that low-income Americans receive benefits by a much higher percentage than those with higher incomes. The longevity gap between the top and the bottom is stunningly wide—14.6 years for men and 10.1 years for women, according to a study published in 2016 by a team led by economist Raj Chetty.

I don’t think the American people would accept steep increases in the age at which they become eligible for Social Security and Medicare. For the sake of low-income and working-class Americans, I’m quite sure they shouldn’t.

[Crafty_Dog]

The Coming Biden Bailout of Blue States and Cities
Taxpayers will be on the hook for mismanaged pensions and projects from stadiums to subways.
Allysia Finley hedcutBy Allysia FinleyFollow
April 2, 2023 1:32 pm ET


The Federal Reserve’s latest interest-rate hike paired with the continuing bank panic is causing credit conditions to tighten. State and local governments could be the next sinking ships that Washington gets called on to rescue.

More than a decade of near-zero rates allowed state and local governments to borrow cheaply. At the same time, the Fed’s quantitative easing inflated asset values and prompted pension funds chasing high returns to pile into riskier higher-yielding investments. Now that the music has stopped, the bills for years’ worth of monetary exuberance are coming due.

The balance-sheet risks for mismanaged states and municipalities have been hiding in plain sight just as they were at Silicon Valley Bank. Continued financial-market turmoil and a prolonged economic downturn could cause some pension funds to collapse and cities to declare bankruptcy. Taxpayers will invariably wind up on the hook for politicians’ bad financial bets.

Local government economic-development projects are already growing more expensive and less attractive to private investors owing to rising rates. Consider the $124 million minor-league soccer stadium in Pawtucket, R.I., set to receive about $60 million in state tax credits, federal Covid aid and public debt. Construction started over the winter, but the project’s developer is struggling to raise money to complete it as credit conditions tighten. That means taxpayers could wind up paying more of the costs, which explains Rhode Island Gov. Daniel McKee’s outburst at the central bank last week.


“I have taken a very strong position that what the Fed is doing accelerating interest rates is not in the best interest of the people of the state of Rhode Island,” Mr. McKee said. “They need to stop the increases, halt any increases, and start decreasing that interest rate.”

If the Fed is to blame, it’s for leaving interest rates too low for too long, which spurred states, localities and private investors to bankroll dubious projects like a 10,500-seat stadium in a city with a population of some 75,000. The country is littered with profligate public-works projects that politicians use to buy votes.

Take San Francisco’s 1.7-mile Central Subway, which opened in January at a cost of $1.95 billion, three times as much as initially estimated. The subway is drawing fewer than 3,000 daily riders, no doubt because the design doesn’t make sense: Riders have to walk the equivalent of three football fields to connect to other transit lines and take three escalators to reach platforms 12 stories underground. That didn’t stop Rep. Nancy Pelosi, other San Francisco Democratic power brokers and their union friends from championing the project. When borrowing is dirt cheap, why not max out the taxpayer credit card?

Now that credit is more expensive, states and localities have come up with a creative new way to finance their political investments more cheaply: Market their bonds as “ESG.” New York City last autumn floated $400 million in “social impact” bonds to fund construction of affordable housing. Enormous demand from investors reduced yields the city had to pay.


Taxpayers will be stuck paying debt costs on political pet projects for years to come at the same time as public worker pensions bleed them dry. A report by the research shop Equable estimated that the 228 largest public retirement systems were running a $1.4 trillion unfunded liability at the end of last June.

But stock prices haven’t increased much, and the values of other pension-fund investments are falling. Fixed-income assets such as government bonds used to make up about half of pension-fund portfolios but now are only about 20%. To meet their targeted investment return rates—typically between 7% and 8%—pension funds loaded up on higher-yielding stocks and “alternative investments” such as real estate, hedge funds and private equity, which rely heavily on leverage.

These alternative investments now make up about 30% of pension-fund investments and are getting slammed by rising interest rates. Defaults on office buildings are increasing while property values fall, which will ding pension funds and make it harder for local budgets to fund retirement obligations. About 80% of property-tax dollars in Chicago go to pensions.

Yet Chicago’s four pension systems have only enough assets to cover about 25% of what they owe workers and retirees, which is less than Detroit’s pension funds had when the Motor City declared Chapter 9 bankruptcy a decade ago. Pension funds in states like Illinois, New Jersey and Connecticut aren’t in much better shape.

Insolvent cities could declare bankruptcy, but states as a matter of federal law can’t. That means their taxpayers will inevitably have to pay more to cover the pension shortfalls. In Illinois 25% of general tax revenues pay for pensions. Many states—including Illinois—can’t afford to bail out their underwater cities, but they also may not want the stain of allowing them to go bankrupt.


The most likely outcome: A cascade of bailouts by some combination of U.S. taxpayers, the Fed and municipal bond investors. Democratic-run states and big cities are simply too politically important for the Biden administration to let fail.

[G M]

The Coming Biden Bailout of Blue States and Cities
Taxpayers will be on the hook for mismanaged pensions and projects from stadiums to subways.
Allysia Finley hedcutBy Allysia FinleyFollow
April 2, 2023 1:32 pm ET


The Federal Reserve’s latest interest-rate hike paired with the continuing bank panic is causing credit conditions to tighten. State and local governments could be the next sinking ships that Washington gets called on to rescue.

More than a decade of near-zero rates allowed state and local governments to borrow cheaply. At the same time, the Fed’s quantitative easing inflated asset values and prompted pension funds chasing high returns to pile into riskier higher-yielding investments. Now that the music has stopped, the bills for years’ worth of monetary exuberance are coming due.

The balance-sheet risks for mismanaged states and municipalities have been hiding in plain sight just as they were at Silicon Valley Bank. Continued financial-market turmoil and a prolonged economic downturn could cause some pension funds to collapse and cities to declare bankruptcy. Taxpayers will invariably wind up on the hook for politicians’ bad financial bets.

Local government economic-development projects are already growing more expensive and less attractive to private investors owing to rising rates. Consider the $124 million minor-league soccer stadium in Pawtucket, R.I., set to receive about $60 million in state tax credits, federal Covid aid and public debt. Construction started over the winter, but the project’s developer is struggling to raise money to complete it as credit conditions tighten. That means taxpayers could wind up paying more of the costs, which explains Rhode Island Gov. Daniel McKee’s outburst at the central bank last week.


“I have taken a very strong position that what the Fed is doing accelerating interest rates is not in the best interest of the people of the state of Rhode Island,” Mr. McKee said. “They need to stop the increases, halt any increases, and start decreasing that interest rate.”

If the Fed is to blame, it’s for leaving interest rates too low for too long, which spurred states, localities and private investors to bankroll dubious projects like a 10,500-seat stadium in a city with a population of some 75,000. The country is littered with profligate public-works projects that politicians use to buy votes.

Take San Francisco’s 1.7-mile Central Subway, which opened in January at a cost of $1.95 billion, three times as much as initially estimated. The subway is drawing fewer than 3,000 daily riders, no doubt because the design doesn’t make sense: Riders have to walk the equivalent of three football fields to connect to other transit lines and take three escalators to reach platforms 12 stories underground. That didn’t stop Rep. Nancy Pelosi, other San Francisco Democratic power brokers and their union friends from championing the project. When borrowing is dirt cheap, why not max out the taxpayer credit card?

Now that credit is more expensive, states and localities have come up with a creative new way to finance their political investments more cheaply: Market their bonds as “ESG.” New York City last autumn floated $400 million in “social impact” bonds to fund construction of affordable housing. Enormous demand from investors reduced yields the city had to pay.


Taxpayers will be stuck paying debt costs on political pet projects for years to come at the same time as public worker pensions bleed them dry. A report by the research shop Equable estimated that the 228 largest public retirement systems were running a $1.4 trillion unfunded liability at the end of last June.

But stock prices haven’t increased much, and the values of other pension-fund investments are falling. Fixed-income assets such as government bonds used to make up about half of pension-fund portfolios but now are only about 20%. To meet their targeted investment return rates—typically between 7% and 8%—pension funds loaded up on higher-yielding stocks and “alternative investments” such as real estate, hedge funds and private equity, which rely heavily on leverage.

These alternative investments now make up about 30% of pension-fund investments and are getting slammed by rising interest rates. Defaults on office buildings are increasing while property values fall, which will ding pension funds and make it harder for local budgets to fund retirement obligations. About 80% of property-tax dollars in Chicago go to pensions.

Yet Chicago’s four pension systems have only enough assets to cover about 25% of what they owe workers and retirees, which is less than Detroit’s pension funds had when the Motor City declared Chapter 9 bankruptcy a decade ago. Pension funds in states like Illinois, New Jersey and Connecticut aren’t in much better shape.

Insolvent cities could declare bankruptcy, but states as a matter of federal law can’t. That means their taxpayers will inevitably have to pay more to cover the pension shortfalls. In Illinois 25% of general tax revenues pay for pensions. Many states—including Illinois—can’t afford to bail out their underwater cities, but they also may not want the stain of allowing them to go bankrupt.


The most likely outcome: A cascade of bailouts by some combination of U.S. taxpayers, the Fed and municipal bond investors. Democratic-run states and big cities are simply too politically important for the Biden administration to let fail.

[Crafty_Dog]

Social Security Was Doomed From the Start
The fatal flaw was FDR’s decision to make it a pay-as-you-go benefit. We should have fixed it by now.
By Phil Gramm and Mike Solon
Dec. 19, 2023 6:29 pm ET


Americans imagine that the Social Security benefits they are promised belong to them. That’s by design. In 1935, President Franklin D. Roosevelt promised to use “compulsory contributory annuities” to set up a “self-supporting system for those now young and for future generations.” Senate Finance Committee Chairman Pat Harrison (D., Miss.) repeated that claim during debate over the Social Security Act: “The annuity system will give to the worker the satisfaction of knowing that he himself is providing for his old age.”

Yet two years later, FDR’s Justice Department successfully argued before the Supreme Court that Social Security payroll taxes weren’t reserved for future retirees. “These are true taxes, the purpose being simply to raise revenues,” assistant attorney general Robert Jackson asserted in his brief to the justices. “The proceeds are paid unrestricted into the Treasury as internal revenue collections, available for general support of the Government.”

By 1939, Social Security taxes were collecting about 8% of federal revenue and funding part of the explosion of New Deal social spending. None of this revenue was used to purchase marketable equities or private bonds to fund future benefits. Only a notional accounting of the Social Security surpluses was recorded by the issue of nonnegotiable government bonds—which provided nothing to fund future benefits, since it was debt the federal government owed itself.

With Social Security running large cash “surpluses,” Congress started adding new benefits. These included payments for dependents and survivors, cost-of-living adjustments, disability benefits, Supplemental Security Income, a minimum benefit, a death benefit and a student benefit. When the War on Poverty and the Vietnam War triggered—and social spending and monetary expansion sustained—9.2% average annual inflation from 1973-81, the Social Security surplus quickly evaporated. By 1980, the Social Security trustees projected the fund would be depleted in 1981.

But inflation and profligacy alone didn’t bankrupt Social Security. One retiree in 1940 could be supported by a 2% payroll tax paid by 159 workers. By 1981, with growing life expectancy and an aging population, that same retiree needed a 10.7% payroll tax paid by 3.2 workers.

Hammered by demographic changes and inflation, Social Security required immediate action when President Reagan took office. His 1981 budget reconciliation bill, Gramm-Latta, ended Social Security’s adult student benefit and the minimum benefit. It also limited the death benefit. Reagan and Speaker Tip O’Neill quickly agreed to the recommendations of the Greenspan Commission’s 1983 report on Social Security’s rescue. The agreement required most federal employees to pay Social Security taxes, accelerated the implementation of the payroll tax hikes enacted in 1977, gradually raised the retirement age to 67, and delayed for six months the annual cost-of-living adjustment.

The Greenspan Commission also urged, and Congress adopted, a new supplemental federal retirement program for future federal employees that would make real investments and pay benefits based on returns. In retrospect, the biggest failure of the Reagan-O’Neill reform was that it didn’t use the 25 years during which Social Security taxes would subsequently exceed outlays to make real investments to help pay future benefits. As always seems to be the case in dealing with imminent crises, the Social Security reformers of 1983—including the Greenspan Commission, the White House, Congress and the authors of this article—focused all their attention on paying near-term benefits. We never considered investing the cash surpluses created by the reforms. We simply spent them on general government.

The actual annual Social Security cash surpluses grew from $2.7 billion in 1984 to a peak of $90 billion in 2001 and then fell to $3 billion in 2009 before turning negative. Had each annual cash surplus been invested—70% in the S&P 500 and 30% in investment-grade corporate bonds—the invested trust fund would have held $3.9 trillion of marketable assets by 2010.

Warren Buffett and Charlie Munger weren’t surprised that Albert Einstein called compound interest the most powerful force in the universe, but most of us have trouble grasping its extraordinary power. In the past 39 years, the S&P 500, cornerstone of the Federal Employee Thrift Savings Plan, has yielded on average 11% in nominal terms (including dividends). Investment-grade corporate bonds have yielded 8.4%. A 70/30 investment portfolio doubled in value every seven years.

The return on the trust fund would have far outstripped the annual cash deficits after 2010, leaving a 2023 surplus of $13.3 trillion. How long the investment of cash surpluses generated by the 1983 reform would have extended the solvency of the Social Security trust fund would have depended on many factors. How much would the continued buildup of Social Security investments have caused rates of returns to fall? How much would the increase in savings by lowering interest rates have spurred economic growth and federal revenues, including Social Security taxes? But if rates of return equaled those of the previous 39 years since the 1983 reforms, the investment of the subsequent surpluses would have guaranteed the solvency of Social Security’s long-term projections for 75 years.

Whoever becomes president on Jan. 20, 2025, will be forced to address the funding crisis of Social Security’s trust fund, which will be depleted in the last year of the mandatory 10-year budget the president must submit in the spring of 2025. No matter how the government handles the mandatory benefit cuts the depletion of the trust fund will trigger, any cash surpluses generated in the process should be invested in real assets, which must be the private property of those who have paid into the system. Pay-as-you-go systems always go but never pay. Only with private investments and the power of compound interest is a sustainable Social Security program possible.

Mr. Gramm, a former chairman of the Senate Banking Committee, is a visiting scholar at the American Enterprise Institute. Mr. Solon is an adviser to US Policy Metrics.

[Crafty_Dog]

HT to BBG

Good thing the Biden admin is doling out all those college loan dollars to people with useless degrees they can’t hope to payback or indeed often leaves them unemployable and hence not able to contribute to a retirement system premised on the fact that future contributors will cover current needs, and thank goodness I’ve been forced to contribute for over 50 years to a system earning my a percentage of the return I would have seen if instead dropped into my retirement plan, a system that will be reducing what it pays in ten years, if not before:

Day of Reckoning for Social Security Draws Closer

The Beacon / by Craig Eyermann / Jul 9, 2024 at 4:06 PM

In ten years, Americans counting on Social Security benefits for income will be in for a shock.


The shock will come because the trust fund that provides about one-fifth of the cash Social Security benefits receive will run out of money in 2033. Starting in 2034, under current law, Social Security will only have enough money to pay 79% of its promised benefits. Everyone who receives retirement benefit payments from Social Security in that year will see that income stream slashed.

That’s according to Social Security’s Trustees, who issued their 2024 report in May. When the Old Age and Survivors’ Insurance (OASI) trust fund is depleted, the agency can only pay benefits from the money it collects through its dedicated payroll taxes. Technically, because that’s what is written into the current law, those reduced benefits are also promised benefits.

None of this is really news. Social Security’s trustees have been telling this same basic story for much of the last decade. The only parts of the story that have changed are the projected timing for when the trust fund will run out of money and how big the benefit cuts will be when that happens. As we get closer to these projected events, the Trustee’s estimates of their timing and the size of the benefit cuts have firmed as they should. At ten years out in 2024, they are no longer long-term projections.

Costly Choices Lie Ahead

Social Security’s trustees have some ideas for keeping Social Security’s retirement benefits at their 2033 level. One of those ideas involves taking money from its Disability Insurance trust fund and using it to pay both retirement and disability benefits. Doing that would delay benefit cuts for two years, after which all these benefit payments would be cut by 17%. The cuts would then continue, growing slowly until they reach 27% in 2098.

Another option would be to increase the payroll taxes that fund Social Security benefits. Right now, that’s 12.4% of the wage and salary income earned by working Americans, and most see half that amount come straight out of their paychecks while employers pay the other half. To avoid cutting Social Security benefits, the Trustees estimate they would have to increase the total employee and employer payroll tax rate to 15.73%.

A third option would hinge on when those who receive Social Security benefits start getting them. They could keep everyone who is already receiving Social Security benefits as of 2023 from experiencing any cuts. Doing that, however, would mean bigger benefit cuts for everyone who starts receiving benefits after that year. If they take this approach, anyone who starts collecting benefits in 2024 or after would see their benefits cut by almost 25%.

They could also mix and match these options. No matter what, whatever happens will take an act of Congress.

Speaking of which, Congress has at least six new Social Security bills to consider. One way or another, Social Security reform is coming. Whether anyone likes it or not.

The post Day of Reckoning for Social Security Draws Closer appeared first on The Beacon.

https://blog.independent.org/2024/07/09/day-of-reckoning-for-social-security-draws-closer/?utm_source=rss&utm_medium=rss&utm_campaign=day-of-reckoning-for-social-security-draws-closer

[ccp]

"Whoever becomes president on Jan. 20, 2025, will be forced to address the funding crisis of Social Security’s trust fund, which will be depleted in the last year of the mandatory 10-year budget the president must submit in the spring of 2025."

Fat chance.
I don't think Trump will do it and I know crats won't.

I did think Al Gore's idea of a "lockbox" was needed.

I also thought W's idea of invest some in the markets:

" Warren Buffett and Charlie Munger weren’t surprised that Albert Einstein called compound interest the most powerful force in the universe, but most of us have trouble grasping its extraordinary power. In the past 39 years, the S&P 500, cornerstone of the Federal Employee Thrift Savings Plan, has yielded on average 11% in nominal terms (including dividends). Investment-grade corporate bonds have yielded 8.4%. A 70/30 investment portfolio doubled in value every seven years."

But no, we have coward and selfish politicians who want the money for spending for their own pet projects agenda glory and re election and glory.

Trump ,  I will not touch SS
DEms , the cans want to hurt seniors and take away your SS.
           we will protect you

and on till the crash comes.

[Crafty_Dog]

Nikki Haley had the ovaries to take this on by adjusting the criteria for those many years from retirement.

[Crafty_Dog]

Liberals’ war on wealth comes for your retirement

The problem with raising the capital gains tax

By E.J. Antoni and Ben Ottosson

The latest tax increase proposed by the Biden administration could mean losing more than half your investment returns. While the radical left is marketing these higher tax rates as “tax fairness” and “tax equity,” the actual effect will be to punish Americans who are saving for retirement.

If enacted, this proposal would raise the top tax rate on capital gains to 39.6% — about double the current rate. This would be the highest capital gains rate in over 100 years and apply even to assets many middle-class Americans plan to use as part of their retirement nest egg.

But tax-happy politicians aren’t stopping there. They also want to increase the top net investment income tax rate to 5%. That means the federal government would take almost 45 cents of every dollar whenever your investments grow, including for your retirement.

It’ll be even worse depending on where you retire or sell assets, such as a home. States including Florida, Tennessee and Texas don’t have a capital gains tax, but other states do, and sometimes it’s even higher than a state’s income tax rate.

In Georgia, Virginia and Wisconsin, the state and federal taxes combine to take over half your capital gains. It’s even worse in California, Minnesota and New York — the total government take in each of those states is over 55%.

And that’s not even the scariest part of this story. Capital gains aren’t indexed to inflation, so you’ll pay tax on assets that haven’t even increased in real value.

Inflation occurs when prices rise almost everywhere because the dollar is losing value. This effect stems from one of the functions of money, which is a kind of yardstick. A higher or lower price signals to buyers and sellers that something has a higher or lower value, respectively. Making accurate comparisons, however, requires a consistent yardstick.

If you measure a football field from end zone to end zone, it’ll be 100 yards long. If you measure the same field tomorrow, however, and it’s now 120 yards, that means your yardstick shrunk from 36 inches to just 30. That’s what happened to the dollar over the last 3½ years — it has lost about 20% of its value, so it takes more than before to purchase the same things.

That’s why the government can charge you capital gains taxes even when your investments haven’t increased in value. Over the last 3½ years, the Dow Jones Industrial Average stock index has increased substantially in price. Still, almost 70% of that increase has been the dollar losing value, as opposed to an increase in the real worth of its constituent companies. Had the proposed higher tax rates on capital gains already been in effect, people saving for retirement would have been absolutely devastated. They would owe such large capital gains tax bills that their inflation-adjusted rate of return on investment would be negative. In other words, the proceeds from their investments, although larger in terms of dollars, could buy less today than when the smaller sum was originally invested. This proposal for sky-high capital gains tax rates is terrifying but not surprising. It’s part of a broader attack on wealth by the radical left, which views all economic progress as misbegotten gains that should be penalized and taxed to extinction.

As if inflation and the current cost-of-living crisis weren’t painful enough, the radical left wants to extend that pain through your retirement years, too.

E.J. Antoni is a public finance economist and the Richard F. Aster fellow at The Heritage Foundation, and a senior fellow at the Committee to Unleash Prosperity. Ben Ottosson is an intern at Heritage’s Grover M. Hermann Center for the Federal Budget

[Crafty_Dog]

The Crushing Financial Burden of Aging at Home
Families face soaring costs and mounting pressures in taking care of their loved ones. ‘I never feel truly free.’
By Clare Ansberry and Anne Tergesen
Sept. 4, 2024 9:00 pm ET


Americans want to grow old in their own homes. But pursuing that dream has gotten harder, and is putting huge financial and emotional strains on families.

In Nebraska, Christine Salhany spends about $240,000 a year for 24-hour in-home care for her husband who has Alzheimer’s. In Illinois, Carolyn Brugioni’s dad exhausted his savings and took out a home-equity line-of-credit to pay for home healthcare.

Traci Lamb closed her business to take care of her mom in Florida. And in California, Cheryl Orr delayed retirement to help pay for care and home modifications for her wife, who has dementia.


Soaring costs of in-home care, medical advances that extend lives but require ongoing help, and the growing ranks of older baby boomers are creating new pressures. Spouses, adult children and siblings are putting their lives on hold to care for relatives, wrestling with sleep deprivation and constant worry. Families are draining savings to hire help, pay for medical care, and modify homes. 

More than 11,000 people in the U.S. are turning 65 every day and the vast majority—77% of Americans age 50 and older according to an AARP survey—want to live as long as possible in their current home. At some point, many will need help. About one-fourth of those 65 and older will eventually require significant support and services for more than three years, according to the Center for Retirement Research at Boston College.

Even when loved ones need round-the-clock care for many years, families provide about half the care hours, says Anqi Chen, senior research economist at the center. “It’s a very large burden on them,” she says.

The cost of paid in-home care has soared in recent years. The 2023 national median cost of a home health aide, hired through an agency, stood at $33 an hour, up from $20 an hour in 2015, according to Genworth, a long-term-care insurance company. Those needing round-the-clock in-home care can expect a median cost of about $290,000, which is more than double the annual median cost of a private room in a nursing home facility and four times the annual median cost of a private room in assisted living, according to Genworth.

Many can’t afford that. About one-third of retirees don’t have resources to afford even a year of minimal care, according to the Boston College center. About 10% of adults 65 and older have long-term-care insurance, according to Genworth, which can cover some in-home care costs, depending on the policy.

“The new inheritance is not having enough money to give to kids but to have enough money to cover long-term care costs,” says Liz O’Donnell, the Boston-based founder of Working Daughter, an online community of caregivers.

Finding and keeping workers is a challenge. Many have left those jobs because of the physical and emotional demands and low wages. Median pay for home health and personal care aides is $16.12 an hour, according to the Bureau of Labor Statistics.

Yet demand for in-home care is high. Many families had bad experiences with long-term-care facilities during the pandemic when they were unable to visit loved ones. Some brought relatives home or resolved never to send them to nursing facilities.

“Postpandemic, people are trying to avoid institutions more than ever,” says Jonathan Gruber, an economist at MIT.

‘I never feel truly free’
Jimmy Salhany, a 77-year-old biophysicist and musician, was diagnosed with Alzheimer’s in 2017. His wife, Christine, a 66-year-old musician initially took care of him on her own in their Omaha home. But she needed help as his disease progressed; he became increasingly unable to bathe and dress. She went through a string of home-health workers, ultimately hiring and firing 27 since 2019, including one who, she says, fell asleep on the job.

She reached a low point during the pandemic when she told her home-care workers not to come because of Covid and had no help. “I couldn’t sleep. I couldn’t leave him,” says Christine.

She toured a memory facility that had a good reputation and an available room with a view of the garden. But on a visit before Jimmy was supposed to move in, she walked through a common area filled with people sitting at tables sleeping with their heads down or staring into space. She had images of Jimmy waking up in the middle of the night alone, confused and unattended.

“I couldn’t do it,” she says. “I am not ready to let go of Jimmy’s care and lower my standards.”


Christine now has a team of five people who provide care 24 hours a day in their home. She hires everyone personally, relying on recommendations from friends and her other workers, supervises her husband’s caregivers and handles payroll, taxes and time sheets, as well as his medical needs. When a worker leaves, she fills that shift until she hires a replacement.   

“I have to be very vigilant. I never feel truly free,” says Christine.

That is a feeling expressed by many. Four in 10 family caregivers rarely or never feel relaxed, according to a 2023 AARP survey. Dementia care is among the most taxing, physically, financially and emotionally. 

Still, Christine says, she is fortunate. They can afford the care and she has grown personally. “I have learned the value of service to others,” she says. “I will have no regrets. I feel like I’m doing the best for him.”

Leo Mordini was months away from depleting his savings when he died in June at age 96. A former marketing executive, the Grayslake, Ill., resident had always made ends meet on his Social Security benefit.

But three years ago after a hospitalization left him unable to walk, Mordini needed round-the-clock care and he was adamant about staying at home, said his daughter, Carolyn Brugioni, 59.

“Dad had phenomenal caregivers,” said Brugioni, of Lake Villa, Ill. “I knew his care wouldn’t be as good in a facility.” 

With 24-hour care, Mordini’s costs ultimately ballooned to $13,000 a month, including his daily home-health-aide bills which rose from $225 in 2021 to $350 this year.

Brugioni used her father’s $350,000 savings to cover the gap between his expenses and his $4,000 in monthly income from Social Security, plus a Veterans Affairs benefit that he qualified for about a year ago.

Mordini lost several weekend caregivers to families willing to pay up to $450 a day. “We just couldn’t compete,” Brugioni said.

Earlier this year, with his savings nearly depleted, Mordini applied for a home equity line-of-credit on his $375,000 home. He tapped $85,000, the maximum he qualified for, and died with about $45,000 in the bank.


Carolyn Brugioni and her husband, Jeff, with her father Leo Mordini. Photo: Carolyn Brugioni
Brugioni said her father was mentally sharp until the end of his life and repeatedly asked her about his finances.

“My father wanted there to be something left when he passed,” she said. “I had to try to avoid the conversation. It would depress him…I always told him, ‘Dad, you’ll be able to live at home forever.’”

Before her father died, Brugioni and her husband decided to take a home equity line-of-credit on their own home in case Mordini ran out of money. The prospect of tapping into her paid-off house so close to her own retirement gave Brugioni sleepless nights, even though she planned to take a lien on her father’s home to recoup the money.

When Mordini died at home on June 13, Brugioni said she “felt a huge sense of relief and new-found freedom” at not having to worry about “what would happen if he runs out of money.”

Family members often provide in-home care themselves, because they can’t afford to pay others, can’t find caregivers they trust, or need to supplement paid care. Nearly one-third of caregivers have been providing care for five years or longer, up from one-fourth in 2015, according to a 2020 report by the AARP and National Alliance for Caregiving.

‘My life is on hold’
Five years ago, Traci Lamb, newly divorced and without children, moved in with her parents, intending to help her mom through knee-replacement surgery. “Then I was going to get my own place,” says Lamb. “Things happened.”

Her mom’s surgery left her in more pain. Her dad, who was obese, had congestive heart failure and chronic obstructive pulmonary disease, began falling repeatedly. Lamb had to leave her job so she could take them to the doctors, get groceries, cook and change her dad when he lost control of his bowels. He died in 2022.

She and her mom couldn’t manage rent on their home and lived with friends for a few months, before moving into a trailer. Her mom slept in the one bedroom and Lamb slept on an air mattress on the kitchen floor.




Barbara Lamb rests on her couch in her home in Lutz, Fla. She shares the home with her daughter, Traci Lamb, who helps with her medication. Behind Traci Lamb is a portrait of herself with her two siblings, who are deceased.
Tina Russell for WSJ (3)
Sitting at the one table in the trailer, Lamb, who worked in the hospice field, started a business to help caregivers, doing online webinars and appearing on local radio and TV shows. She earned enough money to rent a small house, which they moved into in 2023.

“She really wanted to be in a house,” says Lamb, 57, whose two siblings died earlier. Their dog, a Pomeranian named Oreo, can play in the backyard. Her mom is more comfortable and less anxious there.

“Home is the best. It’s more quiet,” says Barbara Lamb, 84.

Lamb’s business was growing. She produced shows for a streaming channel on in-home caregiving and was looking for sponsors.

Then in July, she announced on LinkedIn that she was closing her business. Her mom was recently diagnosed with Parkinson’s disease and dementia, says Lamb, who says she needed to devote her energy to her mom’s care, rather than finding sponsors for her business.

“I had to choose between my mom and my dream,” says Lamb. “My mom will always win.”


Traci Lamb, 57, left, becomes emotional when her mother, Barbara Lamb, 84, talks abut how grateful she is for her daughter to take care of her as she ages in their rented home in Florida. Photo: Tina Russell for WSJ
Lamb began working days remotely for a real-estate venture. In the evenings, she delivered DoorDash to get money for gas and groceries. “Honestly, my life is on hold. She is my priority,” says Lamb. Lamb recently got a marketing job for OdessaConnect, a senior-care company, where she can use her experience.

Delaying retirement
People prefer to remain in their homes, which gives them a greater sense of independence and keeps them connected to familiar surroundings and community, says Amy Goyer, a family and caregiving expert with AARP. But maintaining a house can be expensive. Housing costs, including mortgages and modifications such as walk-in showers, make up 52% of the out-of-pocket costs for in-home care, according to a 2021 AARP study. 

“They think about medical costs. They don’t think of paying for the roof over their heads,” says Goyer, who ended up filing for bankruptcy protection after being financially drained by costs related to caring for her parents at home.

Cheryl Orr, 69, can’t afford to retire. Her wife, Joyce Penalver, 83, was diagnosed with Alzheimer’s two years ago. She can do most things on her own, but is falling more frequently. Both spent their careers at nonprofit organizations, Penalver as a mental- health therapist and Orr as a social worker, and don’t have a lot of retirement savings.

If Orr retires now, the couple, who live in the San Francisco Bay Area, would lose her more generous healthcare coverage and income, which they need to pay for care, bills and modifications in their two-story home. Orr pays $150 a month for an alert service to contact her at work if a sensor detects Penalver has fallen.

“I have good days,” says Penalver. “Other days my legs just won’t work.”



Joyce Penalver, (left) who has Alzheimer's, and her wife, Cheryl Orr in their California home. Orr is delaying retirement to help pay for care and home modifications for Penalver, who is beginning to fall more frequently.
Cayce Clifford for WSJ (2)
They wanted to convert their family room into a first-floor bedroom and install an accessible shower in the first-floor bathroom, because Penalver can’t manage the steps on her own. That would cost $60,000 to $80,000, which they can’t afford. Orr is looking into a chairlift but doesn’t know how she will pay for it.

A woman, recommended by a neighbor, comes three days a week from 11 a.m. to 2 p.m. to be with Penalver for a total weekly cost of $270. The couple pay her $30 an hour, well below a local agency rate of $50 an hour. The agency, like many home healthcare agencies, requires a minimum of four hours a day. 

Their monthly bills, including mortgage and car payments, amount to between $4,000 and $5,000, according to Orr. Once she retires, their monthly household income will be about $5,000 consisting mainly of their Social Security. They both know Penalver will need more in-home care.

Orr runs scenarios through her head, weighing pros and cons of buying a less expensive, single-story house which would mean losing their 3% mortgage rate, or moving into an apartment. But she doesn’t want to uproot her wife, knowing change can be more unsettling for someone with Alzheimer’s.

“Home is your anchor, where your stuff is, where your memories are,” says Orr. “We really want to stay here. I just hope we can.”

Write to Clare Ansberry at clare.ansberry@wsj.com and Anne Tergesen at anne.tergesen@wsj.com

[Crafty_Dog]

(7) BLACKROCK: TIME TO RETHINK RETIREMENT: A recent BlackRock survey shows 91% of Texas registered voters expect a retirement crisis, as 32% say they have no retirement savings despite expecting to retire. Another 18% have less than $50,000 in retirement savings, and 62% have less than $150,000 saved for retirement.

BlackRock CEO Larry Fink’s annual letter to shareholders was entitled, “Time to rethink retirement,” where he called for a new national “organized, high-level effort to ensure that future generations can live out their final years with dignity.” He added that, “t’s a bit crazy that our anchor idea for the right retirement age – 65 years old – originates from the time of the Ottoman Empire.”

Why It Matters: Sweeping changes are coming to Social Security and retirement under the next administration.
BlackRock, half of whose assets are in retirement management, wants to play a role in reshaping what retirement looks like.
The facts are pretty stark. According to a 2022 Senate Budget Committee hearing on Saving and Expanding Social Security, 55 percent of seniors are trying to survive on less than $25,000 a year while around half of Americans over the age of 55 have no retirement savings at all.

Officially, Social Security and Medicare both are on pace to run out of money by 2030 and 2032, respectively.

But those are optimistic dates due to the underlying assumptions by the Congressional Budget Office, which assumes 3% interest rates (5.33% today, but dropping), a 3-4% budget deficit (7% as of July). CBO also does not account for the economic effects of a recession or a prolonged period of stagflation. On Tuesday, JPMorgan Chase CEO Jamie Dimon told investors, “I would say the worst outcome is stagflation—recession, higher inflation. And by the way, I wouldn’t take it off the table.” Dimon added that deficit spending under the next administration would continue to be inflationary.

Speaking to clients this past spring, billionaire “Bond King” Jeff Gundlach said, “I think in the 2028 election, there’ll be nothing else. How are we going to deal with this? … We have $212 trillion of unfunded liabilities. Do you know what the total assets are in the United States? $190 trillion. So we’re what you call ‘bankrupt.’ If we were a hedge fund, we’d be praying every night that we don’t get a margin call because our liabilities exceed our assets.”

Bottom Line: Social Security and Medicare may both face a reckoning during the next presidential administration, and their fates may hinge on which party controls the White House and Congress after January 2025. – M.S.
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