One of the topics that has dominated the political dialogue over the last several months is the federal budget deficit. There has been talk of cuts to programs that retirees count on to one degree or another such as Social Security, Medicare, and Medicaid. Since the average monthly Social Security benefit in 2010 was $1,072 according to the Social Security Administration, you are clearly going to have to feather your own nest if you want to enjoy a comfortable retirement. Yet, when you combine the Social Security benefits of a successful couple with the value of Medicare benefits, these programs make a significant difference to all but the wealthiest of Americans.
People who talk about cutting Social Security and Medicare often refer to them as “entitlement” programs. However, if you approach the Social Security Administration asking for your “entitlement” and you have not paid a sufficient amount into the programs, you will be turned away empty-handed. So these programs are only available to those who paid into them, and this is something to keep in mind when you hear these debates taking place on Capitol Hill.
Because of the fevered pitch surrounding this issue the Kaiser Family Foundation recently conducted a poll in an effort to gauge public sentiment with regard to the matter of cuts to the federal budget. Their findings were interesting and perhaps somewhat deflating to those who would like to slash programs that senior citizens paid into throughout their lives and ultimately rely on during their elder years. 62% of those polled stated that they were not in favor of any reductions to Social Security. 57% of poll respondents were not supportive of cuts to Medicare, and half of the Americans polled did not favor Medicaid spending cuts.
Retirement planning involves making projections, and the ongoing viability of these programs is something that is very relevant to anyone who is attempting to prepare for the eventualities of aging. This poll is telling, and it will be interesting to see how the matter is handled by lawmakers who may be feeling a bit of a backlash around this time.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.