Friday, May 31, 2013
The May 2013 article of National Geographic offers a cover and story, “This Baby will Live to Be 120”, by Stephen S. Hall, photography by Fritz Hoffmann.
The article offers many examples of long-lived seniors now, and identifies a few groups whose genes favor longevity These include Ashkenazi Jews, older Amish, and native people in Ecuador with Laron Syndrome, which makes them short.
Oprah Winfrey has documented people living in “Blue Zones”, including one in the California Central Valley, where people live very long. Some favorable factors include eating natural (unprocessed) foods and strong social ties and extended families, with a lot of “eusociality” and “we-ness”. Hyperinividualism may be good for cultural achievement, the sciences and the arts, but not for longevity.
A typical summary on a longevity-oriented site is here.
Longevity would require that adults be willing to dedicate themselves to goals of other family members as well as their own, much more than is likely for many people today.
My own mother lived to be 97. I felt disturbed when people suggested to me that my most important goal should be to see her live to be 100. What about me? That’s the rub.
I had reviewed Barbara Walter’s “Live to Be 150” special on April 1, 2008 on the TV blog.
Tuesday, May 28, 2013
I recall when my own pension with ReliaStar was frozen at the beginning of 2000, after ten years of employment. My own pension amount seems a little more than the formula would calculate, partly because USLICO’s (based on the first company which ReliaStar as NWNL had acquired) was fairly generous (and had included a “Social Security Bridge” until age 62). ING actually restored a retirement program after it acquired ReliaStar in 2000, but I was laid off at the end of 2001.
I also had six years of employment in Dallas, TX with Chilton (now Experian) in the 1980s. Maybe I was vested when I left, and it would pay to go back and look.
My own history is interesting when viewed in light of a Washington Post Sunday Business section article Sunday May 26 by Michael A. Feltcher, “Why he froxe the company pension”, link here. The narrative concerns ILM Group and its president John Wolf. The culprit seems tio be very low interest rates, as set by the Fed, which increases the reserves that companies have to keep in the funding of their pensions. There is a partial holiday from that which allows companies to use a 25-year average rule, but that expires soon.
Understand, freezing a pension is not the same thing as terminating one, and putting it on the backs of the PBGC.
My own mother used to complain about low interest rates, that it was impossible for seniors to earn anything, although she left the world in 2010 better off than a lot of women from one-earner homes.. It’s getting to the point that the Fed and banks would charge just for keeping deposits “safe”. Maybe this plays into the rhetoric of the radical Left in the past, which railed against accumulated and familial “inherited wealth” and wanted to see everyone taking his turns as a peasant in the fields, maybe even the elderly.
Sunday, May 26, 2013
Apparently, adult children are finding themselves on the hook in estate situations where they didn’t know enough about an elder’s finances before a sudden death. That seems to be the warning in a Business Day article by Tara Siegel Bernard. “The talk you didn’t have with your parents could cost you,” the “Your Money” column,. Saturday. The link is here.
In the story presented, a woman only in her mid seventies had fallen to her death in her home. (I have basemaent stairs and must use the rail handle every time – even when carrying stuff downstairs). The woman had a mortgage that the kids didn’t know about. And there were multiple Steve-Heller-like Catch 22’s, in getting a death certificate and in being able to get precise information on the amounts owed.
My own father took out a mortgage on the family Drohega in the 1950s (with no Richard Chamberlain priestly character) in order to help the First Baptist Church of the City of Washington DC with its new building in 1955. I didn’t find out about this until around 1996, when I went over my own medical records (dating back to 1962), all in paper, from my stay at the National Institutes of Health in my college years. However, no evidence of such a loan has ever surfaced since I returned “home” in 2003, before my mother’s passing at the end of 2010.
The article discusses the desirability of trusts (revocable at first) and also of joint accounts (JNT’s), both of which make life much simpler in states with complicated probate processes.
I thought that adult children as individuals were not responsible for deceased parents' deaths if their names are not on joint accounts or there are no trusts. So this seems like a mixed bag in some families.
Friday, May 24, 2013
Social Security means testing debate: references on the "integrity" of the self-funding payroll tax mechanism
On May 16, I wrote a posting here about a suggestion for immediate means testing of Social Security. I received a comment (posted at the end) to the effect that Congress abandoned “self-funding” for Social Security, as apparently intended by FDR, in the 1940s, and that the program is “financed” rather than “funded” today. The comment responds to my suggestion that Congress should pass a law (answering Flemming v Nestor) giving beneficiaries some actuarially-based ownership rights to their contributions. I actually believe the GOP and conservatives would support that, and that such a measure could help reach a bigger budget compromise in Congress. The posts suggest that this would present future legal or constitutional problems.
I tried to find some more factual basis on the “finance” v. “funding” debate.
Social Security has a couple of complicated accounts that could prove definitive, but they need interpretation.
One of these is an “Internet Myths” page here.
Another is an FAQ page where Social Security discusses the history of the Trust Fund and the significance of the accounting gimmicks and terminology, which have flipped back and forth over the years, here.
There are many reputable sites that explain how Social Security is supposed to be funded by the FICA Payroll Tax (largely), like FAIR (Peter Hart), here.
Andrew Biggs has an interesting perspective on the self-funding paradigm. First Congress weakened the contributory aspect of FICA by paying lower income workers more relative to what they had contributed (progressivity). And the Congress and the president gave workers a two-year-long cut of 2% of the payroll tax, which was rescinded at the beginning of 2013 with the Fiscal Cliff legislation passed Jan. 1. That means that these workers will have paid less relative to what they get than they should have, actuarially speaking. The link is here. I’ve always thought that the FICA tax holiday was “irresponsible” and could invite further erosion of benefits already “earned”.
What does all of this mean? Two points stand out. One is that the Social Security Trust Fund does have a legal claim on the Treasury in case of default (as with the debt ceiling). It is likely that federal courts would see it this way, in the absence of further direction from Congress. (AARP and others would certainly be eager plaintiffs.)
The other is that gradually the claims from retirees are gradually outstripping the income from FICA. Technically, this first happened in 2010 (making the tax holiday even more dubious). The reason is “demographic winter”. People live longer, and there are fewer children and fewer workers, although in the US immigration does help take up some of the demographic slack. It’s just “do the math”. For any annuity-style retirement program to be stable, there has to be an increase in “premiums” (FICA taxes) and a constantly increasing retirement age to account for the demographics. A chained CPI could help.
Essentially, you have to help people take care of themselves before they can take care of others. And people can't help themselves as well in a fiscal system that jeopardizes its own stability and, particularly, integrity. That’s why a “self-funding” system should be kept sound, with ownership rights (even privatization) before Social Security is used for “wealth redistribution”.
Tuesday, May 21, 2013
Health care costs in retirement are likely to large for most seniors, even with Medicare, according to a Fidelity Investments study discussed Sunday by Michelle Singletary in the Washington Post in her “Color of Money” column, link here.
The estimate (of $220000 per couple living into the 80s) does not include dental (including restoration), and over-the-counter, and particularly does not cover nursing home care (which Medicare normally does not cover). It does not appear to take account the possibility of purchasing Part B supplemental. I purchased it from AARP at 65, and it costs about $110 a month now.
I could not find the study on the Fidelity site today (which seems underwhelming).
One of the biggest drivers of “costs” for retirees is falling into “traps” where physicians feel obliged to order many disruptive tests and procedures.
Another related issue is retiree health insurance from employers for retirees not yet 65. I paid about $165 a month for ING’s policy, which covered only 70% of hospitalization. Fortunately, I never needed it.
I did use the Part B Supplemental in 2010 for an outpatient hernia repair. The coverage brought the list price of the surgery fro $14000 down to $3500, and United Health Care picked up the 20% ($650) copay without any questions.
Also, when I switched to Medicare at 65, ING’s Part D was very expensive, but the AARP one was inexpensive. I don’t know why.
Monday, May 20, 2013
Would extensive medical testing in retirement explain my boyhood "male competitiveness" problems?; the "shame" barrier
On recent posts on my main blog, I have talked about my physical backwardness when I was growing up, in an era when such an issue had moral significance, particularly with respect to experiences like the military draft.
Although somewhat sickly as a child, I settled down as an adult and, although not very competitive physically, was very stable my whole working life, with few sick days, and the ability to deal with all-nighters when necessary for production support.
Since about the time of my mother’s heart surgery (in 1999, and she would live eleven years afterward, making it to age 97), I have noticed irregular heart beats myself and been treated for hypertension. I have never had a complete heart workup, although I suspect I do have what some authorities call “stable angina”.
On May 15, I wrote a post about the “trap” one can fall into once, under the Medicare system, doctors start pressuring patients into taking every conceivable test.
However, at some point, I suppose that I will have to consider this scenario. What if I wanted to work overseas in some humanitarian effort? I would have to be much surer of my own health and stability.
Furthermore, given the “moral” cast of the issues earlier in my life, I suspect that I owe it to both myself and my audience to find out if there was a medical explanation for why I was behind as a boy.
Nothing unusual surfaced when I was a boy, or a patient art NIH (in the fall of 1962). But in those days much less was known about the possibility of genetic, epigenetic or congenital issues, which could have been neurological (as related to the autism spectrum) or possibly circulatory and cardiac in nature.
Heart tests could involve the stress test (including nuclear), the Holter Monitor, and echocardiogram. As the YouTube video above illustrates, a certain threshold of “shame” may be crossed.
Treatments that occur can include angioplasties, coronary bypass surgery (of varying degrees of invasiveness), aortic aneurysm resection, pacemaker implantation and value replacement. The last two of these can sometimes be done with minimal invasiveness.
Barbara Walters had major valve surgery in 2011 at age 80. As one ages, the likelihood that something like this will eventually happen becomes greater.
But the end result of all of this, which can take a lot of psychological commitment from the patient and keep him out of circulation for a long time, could be (in my case) and explanation for what happened when I was younger. It could be necessary and worth it some day, although not now, until I get “done”. Is this bargaining?
I make no promises, and no specific commitment as to time. But I see how this could show up down the pike, beyond the visible horizon.
See Sept. 3, 2011 post for Wikipedia source for second picture.
Thursday, May 16, 2013
Means test Social Security right now, based on accumulated wealth as well as income, says a major investment company
Jay Roumell, founder of his own investment management fund, has a shocking proposal on p. A17 of the Washington Post, Thursday, May 16, 2013. The rich should give up their Social Security benefits NOW. And the criteria should be accumulated wealth more than income.
The title of the printed article is “A balance-sheet fix: Sacrifice by the wealthiest can save Social Security”. Online, the title is even more blunt: “The rich can save Social Security, by giving up their checks”. The link is here. The site for Roumell’s company is here.
Of course, we can come back with the usual Ayn Rand questions. Who decides who is rich? Where are the cutoffs? Etc. Roumell even admits that can be a problem.
The idea of using accumulated – especially inherited – wealth for means testing may not be that new or unachievable. There are many measures of accumulated wealth – starting with estate or trust tax returns. The far left, four decades ago, used to rail against inherited wealth and wanted to eliminate it.
Roumell dismisses arguments that current recipients paid into the system. First, he says, they should be grateful they can make a gift. The he makes existential points that are irrelevant to the questions about the nature of FICA “taxes”.
Two points come to mind. The Supreme Court, as noted on Jan 2, had ruled in Flemming v. Nestor that there is no “property right” to the value of FGICS contributions. On the other hand, the Social Security Trust fund is effectively a bond holder on the Treasury (this point became clear in a New York Times debate column on the debt ceiling in January 2013), and like China, might have a legally enforceable claim preference in case of debt ceiling issues. That point became controversial a few days ago when Congress (the GOP) did propose legislation ratifying the bond holders claims on the Treasury, an idea that caused an outcry.
I have a big problem if someone shows up at the door and demands a claim that can expropriate from my life. So I have a problem with the unconditional “gift” idea in his arguments.
But I think Congress should pass legislation addressing Flemming – conferring ownership rights to the actuarial value of FICA contributions (including legal spouse’s) based on life insurance industry standard calculations (for annuities). And I think bond holders do come first on the Treasury.
Furthermore, I don’t see why we shouldn’t continue to consider gradual increase in retirement age, increase in the FICA ceiling, and COLA (chained CPI) formulas to reduce the burden.
When all these things are done, it may be appropriate to look at means testing, and that could look at accumulated and inherited wealth as well as income – for benefits above the actuarial value justification. But really, this discussion belongs more in the area of Medicare – where Medicare taxes on wages pay for only a fraction of benefits used today. That fits into yesterday’s discussion of how we use medical procedures.
What’s important to me is the integrity of the system. Most people understood FICA taxes as supporting their own income later in life, as their money, even if the Supreme Court questions it. Congress should fix that (most of all, the GOP). Fix the accounting at an individual beneficiary level before you get into "a pervert's guide to ideology" (to quote a controversial film). If the system if live in has no integrity, than I have no purpose myself at this point in my life.
Sam Seder discusses means testing for Medicare above, by increasing premiums.
Wikipedia link for Saverna Park MD picture (there Sunday).
Wednesday, May 15, 2013
I wanted to make a note about my own medical strategy, as I near 70.
I depend mainly on momentum. I’ve gotten through my adult life with rather minimal use of health care services, after been a “sickly” child. The one big exception occurred in January 1998, when I fell in a convenience store in Minneapolis and sustained an acetabular hip fracture. But I was back to work in three weeks, on crutches, healed fully, and never looked back.
At some point in the relatively near future, I’ll do the “Clear Choice” thing, but with two private dental surgeons, who charge a little less for a little more value (more implants). It means a full day under sedation. The time consuming part is obviously the remaining extractions. A good part of this had to be prepaid with checks.
It’s possible to fall into a trap, I suppose. If there were to be some kind of serious problem during the day, I could be without teeth until other things were done. It’s a bit risky.
I haven’t done a lot of the things people recommend – like the colonoscopy. I grew up in an era when “you got what you got”, and when the end came, it was usually sudden and quick, but often after a more of less normal life span. (For men, reaching 70 was OK, and 80 was good – and this usually happened without much intervention.
I think once you go down the road of multiple tests, it’s very hard to resist the pressure for invasive treatments. You’ve opened a Pandora’s box and can fall into the abyss. Once you start spending time in the hospital, it’s hard to stop it. It’s a downward spiral. We all know the risks of infection, and that doctors won’t stop trying to do more treatments. In the cardiac area, the possibilities seem endless: bypass surgery, valve replacement, pacemakers. Some of these can be done less invasively than in the past.
Also, as it stands now, you can’t have Internet access in the hospital – they don’t allow even cell phones. It sounds like they could allow it if you paid for it. Medicare wouldn’t have to cover it. (It's pretty easy to see how the urge to treat everything affects Medicare sustainability.)
My mother had coronary bypass surgery at age 85 in 1999 – a possibility that I didn’t see coming and didn’t know was possible at that age. She got eight good years, and started deteriorating in 2007, to pass at the end of 2010 after an agonizing decline. During that time, a surgeon did a lumpectomy and wanted to do further one. I had to “just say no”.
My father had an aortic aneurysm at age 74, in 1977, underwent an open resection, and lived eight years afterward. They were all good. He was ill only four weeks at the end of 1985. He died of metastasized prostate cancer on New Years Day, 1986. He could not have tolerated the idea of long illness or invalidism.
There is a lot more pressure now on elders to accept the idea that they could live a long time dependent on others, and there is more pressure, as a result, for filial responsibility, an ironic observation. Even though I grew up in more conservative times, there was not an expectation that life could or should be prolonged a long time at the end. There wasn’t the ability to do it. Now there is, but only for people with strong social supports, who love others who love them back. The trends in medicine definitely run counter to the hype-individualism and weaker social capital of modern society. I am certainly not someone who needs a social life set up for me; I could never tolerate it.
Oh, never go to the doctor. You might not come home. Remember Dave Letterman and how he joined the zipper club.
Sunday, May 12, 2013
"New America" proposes buttressing Social Security with VAT, other means; would it be means-tested? A new look at the "social contract"
The New America Foundation has been talking about a new “social contract” to provide more sustainable rearing of the young and care for the elderly. It sounds interesting to me that it uses the term in a policy context, rather than one of implicit individual obligation. But one of its ideas is to use a European-style VAT (value added tax) to buttress a strictly means-tested component of social security, adding on to personal savings (401(k)) and private pension, both of which are waning.
The most recent policy paper is here.
In the Washington Post, columnist Matt Miller spoke about this in a column “15000 Dow and a retirement crisis ahead”, link here.
New America has another paper more specific in about Social Security, “Expanded Social Security:A Plan to Increase Retirement Security for All Americans”, by Matthew Lind, Steven Hill, Robert Hiltonsmith, and Joshua Freedman, April 2013, link here.
Steven Hill also has another paper on his own site on Obama’s proposal to use chained CPI’s: He stresses portability, and the funding by reducing more tax benefits for the rich as well as VAT sources, here.
Steven Hill and Andy Coates have a one hour presentation on Social Security on YouTine:
This does sound a bit like European “socialism”. What about longer life spans and lower birth rates?
Tuesday, May 07, 2013
Social Security beneficiaries who got laid off from a high-paying job when well into their 50s or 60s often wind up with compromised benefits, as a story on CNN money today explains. That is “Unemployment haunts Social Security Recipients”, link here.
The basic problem is that your Social Security benefit payment is based on your top 35 years of earnings. If you lose a high-paying job at the end of your career, and then work in interim jobs for low pay, your best 35 years earnings average goes down. It’s like blowing a test in high school or college.
Also, “you” may feel pressured to start Social Security benefits early, when they will be less. Furthermore, some employers base pension payments on the expectation that Social Security can start at age 62, and increase the “offset” penalty, or reduce the “bridge” at that age.
I lost my main IT job on Dec, 13, 2001 at age 58 (actually I stayed on the payroll until Dec. 31). I had 8+ months severance and a 401(k). But because of later circumstances, I converted the 401(k) to an IRA and took out taxable payments from 2004 to 2007, thinking I could need to prove income if in fact I needed my own apartment. I would have paid less tax had I been able to stretch it to five years.
As an aside, readers may enjoy the Association of Flight Attendants' (AFA) discussion of the Social Security Offset on YouTube, 2008.
Wednesday, May 01, 2013
Here’s a telling piece by Thomas L. Friedman in the New York Times, May Day, p. A23, “It’s a 401(k) World”, link
He could have called it, “You’re on your own, baby”. (Or “Baby, it’s cold outside, especially in Denver.”)
It’s a world of opportunity for people who can do things for themselves, like managing their own portfolios and building up wealth while still working. Don’t depend too much on investment advisors or insurance agents.
This is not particularly good news for seniors who might make a second career of out financial palnning or community agenting. The insurance companies and financial institutions know that a “way of life” for a lot of financial professionals may be in jeopardy, if younger retirees and executives in their 50s and 60s decide they can make it on their own.
It’s a very good world for the kinds of teens who develop their own interests, tinker, develop something, and then can turn around and sell it.
The whole notion of man as a primarily social creature is starting to seem up for grabs. This doesn’t necessarily bode well for long term sustainability.