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The U.S. isn’t doing enough for elderly Americans, says Mike Bloomberg, the billionaire former New York City mayor running as a Democratic candidate for president this year — and he has plans to change that, if elected.
Bloomberg, a latecomer to the candidate list, introduced his proposed retirement security policy over the weekend, which includes reform to Social Security, Medicare and financial aid for older Americans. Part of his plan would be to restore the fidicuary rule, an Obama-era law requiring financial advisers to act in their clients’ best interests for retirement accounts, and improve housing options for older Americans. “As one of the world’s wealthiest nations, America should be able to take care of its elderly,” he said in the policy proposal. “Yet more than 10 million people aged 65 or older struggle to meet basic monthly expenses such as health care, food and rent.”
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Here are highlights of Bloomberg’s retirement proposals:
On Social Security:
Bloomberg suggests introducing a minimum benefit for low-income seniors, similar but more expansive than Supplemental Security Income (SSI). In his proposal, Bloomberg says SSI eligibility is “complicated” and “take-up is low.” His new minimum benefit would help roughly 10% of current recipients, he said.
The candidate, who founded financial news and information company Bloomberg LP, would also adjust the cost-of-living allowance for Social Security, which currently tracks inflation for working Americans (not elderly ones, who have different living expenses with inflation that tends to rise faster than for the general public). He said he would also examine other options for improving the benefit system, including supporting family caregivers who have lower or less-consistent wages, and surviving spouses, who often suffer from a loss of household income despite the same living costs because of a partner’s death.
Some critics argue his proposal for Social Security is weak. “The hard truth for voters to understand is that Bloomberg’s plan for Social Security falls short, and offers little more than a promise to think about the problems presented by the system’s long-term financing gaps,” wrote Brenton Smith, a MarketWatch columnist and founder of Fix Social Security Now, a non-partisan site dedicated to improving Social Security.
Social Security, as it stands, needs help. The trust funds that support the system are expected to run out of money by 2035, at which time beneficiaries would receive only about 80% of what they’re owed. Congress has never let that happen, but has yet to decide on a solution so far.
Fellow candidates have unveiled proposals for Social Security and retirement security reform in the past, including Bernie Sanders, Elizabeth Warren and Pete Buttigieg. Little about retirement security, however, is ever discussed on the Democratic debate stage, and Social Security is often considered the “third rail” of politics.
“It is time to start talking about Social Security,” Alicia Munnell, director of the Center for Retirement Research at Boston College and MarketWatch columnist, said. “It is the backbone of retirement.”
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On Medicare:
The presidential hopeful said he would limit out-of-pocket drug costs for Medicare beneficiaries and extend coverage to services not provided under Medicare, such as dental, vision and hearing checkups. (Medicare does pay for hospital services in those areas, but not routine visits.) His proposal also includes developing programs to support long-term care needs at a patient’s home, as well as create a “federal safety net to insure against catastrophic long-term care costs.”
Married couples retiring at age 65 can expect to spend more than $280,000 on health care during their retirement, but that doesn’t include long-term care costs, which can be quite expensive. Many Americans can expect to need some sort of long-term care, defined as needing assistance with a few daily living tasks, such as bathing, eating or going to the restroom, according to the U.S. Department of Health and Human Services. The national average cost for long-term care in the U.S. was between $225 to $253 a day at a nursing home, depending on a shared or private room, in 2016, or $20.50 an hour for a health aide.
On retirement security in general:
Bloomberg’s proposal includes a few other provisions to ensure Americans are not falling into poverty in their old age. He suggests encouraging people to save more for their futures, by automatically placing savings in a target-date fund while they’re working, automatically enrolling savers in an inflation-indexed annuity at retirement age and designating a small portion of accounts to an emergency fund, so that Americans aren’t tapping their retirement funds and incurring a penalty (or eroding their nest egg).
The candidate also wants to restore the Department of Labor’s fiduciary rule, which required brokers and insurance agents to advise clients on the best strategies for their retirement accounts, as opposed to what is a suitable recommendation but could cost more in fees and commissions. The fiduciary rule, which was rolled out under the Obama administration, was abandoned under the Trump administration. He also includes expanding rental assistance and instituting an affordable housing plan for older Americans, as well as supporting programs that would allow seniors to stay in their homes in their old age.
Retirement-related legislation hasn’t been entirely dormant. Congress passed the Secure Act in December, which aims to bolster retirement security for Americans. The law encourages small businesses to offer their workers retirement plans, as well as expands access to annuities in 401(k) plans and make it easier for participants to understand how their account balances will translate to income in retirement. The legislation also changed the ways many beneficiaries can inherit individual retirement accounts.
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Still, more can be done to prevent Americans from falling short in retirement. Many Americans rely on Social Security for much of their retirement income, according to the Center on Budget and Policy Priorities, a Washington, D.C.-based think tank. About 40% of middle-class Americans are at risk of living near or in poverty by the time they turn 65, according to a study by the Schwartz Center for Economic Policy Analysis at the New School.
Bloomberg’s suggestions come a week after President Trump announced his 2021 budget, which includes trimming funding for Medicare and Social Security disability benefits. Americans’ Social Security retirement benefits would go unharmed, but other programs, including those that support nutrition and utility bills for the elderly, are at risk of being cut. Experts say the budget is unlikely to pass as is.
Bloomberg has yet to participate in a debate, though he has qualified for the Las Vegas event on Wednesday.
