There is no denying that the pandemic will bring about significant changes in many aspects of our lifestyle, including the decision to opt for early retirement. Unfortunately, while the first qualification age to trigger Social Security benefits is 62, the qualifying age for Medicare is 65 (with certain exceptions), thus forcing millions of willing retirees to wait until the Medicare kicks in at 65 to avoid having to walk into the expensive COBRA/health insurance trap. Therefore, Congress should seriously consider lowering the Medicare age to 62 for all Social Security-eligible employees to allow and incentivize early retirement. So, what are the potential advantages? Let's consider these:
1. The Simultaneous Trigger of Social Security and Medicare at 62 will allow Willing Employees to Retire from "Full-time" Workforce at 62 – This will free up millions of jobs. Again, to qualify for the proposed "Medicare at 62," one must simultaneously trigger the Social Security benefits at 62, thereby ensuring permanent retirement from the "full-time" workforce. Of course, if one decides to return to the full-time workforce later, one must return all of the benefits earned (in line with the current Social Security law). Should the new retirees, from time to time, need to supplement social security incomes, they will have access to many of the part-time jobs the recent graduates would leave behind, leading to a very healthy and complementary continuum.
2. The Simultaneous Trigger will Open up Millions of Jobs for New Graduates – Since most people retire from "long-held" jobs, those jobs tend to be "career" jobs. Most companies try to fill the long-term career jobs with new graduates, via their 1-to-3 year training programs (e.g., engineer trainee, management trainee, analyst, and research trainee, marketing trainee, etc.). Also, in today's fast-changing technological environment (as AI and Robotics have already taken over), the new engineering graduates are far more critical for the labor force than their senior counterparts, most of whom need extensive retraining. Therefore, the simultaneous trigger will allow senior employees, unwilling to be retrained, to take the early retirement and move on.
3. The Lower Replacement Wage will help Hire More New Graduates – By sheer longevity, the retirees usually command some of the industry's highest salaries. Since the new graduates would be hired at significantly lower wage levels, the replacement ratio might be higher, perhaps three new hires for every two persons retiring. Even if a small percentage of this group, say 20%, is enticed to retire at 62 every year, an unprecedented job boom would be in the offing. Now, add the higher replacement ratio to it, and it's an unparalleled boom plus!
4. The New Generation of Early Retirees will significantly Boost Leisure, and Recreational (Adult Lifestyle) Industries – The creation of this new generation of early retirees with significant disposable income will provide a big boost to the leisure/travel and recreation industries as a whole. From vacation homes to new cars to hospitality to airlines to Amtrak to cruise-lines to recreation vehicles (RVs), etc. will all benefit from this new-found economic class. The arrival of early retirees might help smooth out off-peaks leading to year-long consistent and predictable traffic patterns.
5. The Job Boom among Millennial and early-Gen Y will provide a Gigantic Boost to their Lifestyle Industries – While the early retirees will bolster spending in Leisure, the counter-story could be as exciting as well. Considering the millennial generation and early-Gen Y (born between 1995 and 1999) will fill in the vacancies to be left behind by their senior counterparts, their enhanced spending power will be a big boon to the (trendy) lifestyle industries like techs and gadgets, fashion and professional garments, alternative health and beauty, etc. The housing industry will see the beginning of a new replacement cycle.
Fast-growing mid-range companies do not necessarily compete for the top talents as they are generally competed away by the large-cap companies. This new job boom, resulting from the departure of early retirees, will see massive growth in high-paying career jobs, potentially trickling down to mid-to-smaller companies over time, making them more competitive in the global marketplace.
The higher replacement ratio -- three new entrants for every two retirees -- will most probably make the program revenue-neutral, if not revenue positive, but cost-sharing could help manage any temporary shortfall. Early retirees would be responsible for part of the additional Medicare costs as cost-sharing; for example, 15% pass-through at 62, 10% at 63 and 5% at 64, etc.. Even if it comes down to some cost-sharing, it would still be a far better option than the COBRA or individual insurances. On the positive side, in a cost-sharing event, the participating HMOs (most likely) might offer to pick up the tab to shore up their enrollments.
Again, since the pandemic is expected to reshape our lifestyle, especially the 60+ population in this country, Congress should seriously consider lowering the Medicare Age to 62. It's a no-brainer!
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