Proposal to Extend Social Security and Medicare into the Future:

Attached is a proposal to extend the life of Federal Insurance Contributions Act (FICA) for those who may need it into the next generation and beyond without any new taxes.  An internet search of the FICA law shows a history of many changes in the past 75 years, particularly changes in the calculations used to provide monthly payments to eligible recipients.  www.ssa.gov

This proposal has never been tried before, so far as we have been able to find.  The concept is to provide enough incentive to those who can afford to wait beyond age 70 to start taking FICA payments later.  The longer that eligible recipients wait to start, the greater the savings to FICA, and the reward for waiting is larger payments when they do begin taking them.  Currently there is a 25% penalty for starting payments at age 62, and a 32% reward for starting payments at age 70, but there is no reward for waiting beyond age 70.  This creates a strong incentive to start taking payments at age 70 even if recipients do not need them.  Currently, according to the Social Security Administration, 55% of eligible recipients start at age 62, and 3% start at age 70, and the average monthly payment is a bit over $1000 per month.  If the reward was greater, and 5% or more waited beyond age 70, actuarial tables can be consulted to calculate expected results.  The key is to find the best incentive to get eligible recipients to wait.  We believe there should be adequate payments to cover Assisted Living (approx. $3k/month) costs by age 80, and Nursing Care (approx. $6k/month) costs by age 90 for the recipient who lives that long.  Extending the 8% increase annually beyond age 70, or adding 1% each year to the previous increase, may be adequate to provide enough incentive to extend the life of Social Security for many generations, but needs federal legislation to implement.  Extending the age at which FICA payments are initiated by eligible recipients would likely also reduce Medicare costs as well because most of those who would delay accepting FICA payments would likely be entrepreneurs and good money managers who (if fortunate to not have major losses) create jobs for others and thereby increase payments into the FICA and Medicare system through those additional wages and salaries.   

Please consider this proposal.  I would be happy to answer any questions.

Don L. Ranck     429 Strasburg Road     Paradise, PA  17562    
 717-687-7353           don@verdantview.com