On Sunday’s CBS 60 Minutes, they reported that 82% of likely voters are more disgusted than excited for the election. Regardless of your politics, neither candidate gets high marks for trustworthiness and there is a lack of confidence that the country is heading in the right direction.
On this day before Election Day, I thought I would comment on the four key things that will be very important for early retirees in the future and I would like the new President and Congress to focus on:
- Government Debt – Despite general strength in the dollar and very low inflation, I worry that with $20T in federal debt, our currency is vulnerable when the rest of the world begins to strengthen. Continued government debt leads to inflation and since part of our retirement nest egg is a fixed pension, inflation will have a dramatic impact on its value. Fully 49 of the 50 states have a balanced-budget requirement that I would love to see adopted on a federal level.
- Social Security / Medicare Entitlements – If you worry about where the federal debt stands today ($20T), what are we going to do to pay the promises we’ve made to senior citizens in the future? Looking at federal spending, Ezra Klein from the Washington Post commented that our government could be described as “An insurance company with an Army”. In fact, SSA and Medicare spending is already 2.5x what we spend on the military. The two programs are expected to drive us an additional $40T in debt over the next 30 years unless the programs get a major overhaul.
- Affordable Care Act – ObamaCare has been great for early retirees in providing guaranteed coverage, but the economics of how it has been structured is an absolute mess. I wrote about our experience in this post recently, and we are getting close to committing to our plan for 2017. It looks like we will pay +38% more and have our deductible double to $13K. Additionally, the federal cost for the program has ballooned from Obama’s original estimate of $0.9T to $2.6T. We’re fortunate enough to be able to cover the exorbitant increase, but many people are being incredibly squeezed.
- Income Tax Reform – Our federal tax code is needlessly complicated. Printed out, they say it is over 1,000 pages and has thousands of breaks and penalties for seemingly every person and special interest. While I wish they would look at a simple national sales tax to encourage savings, at the minimum I would like the new President and Congress to reform the income tax code and eliminate all the loopholes and complexity that pick winners and losers in our society. In fact, I would love to see a discussion behind a flat tax – back to Steve Forbes’ call for a 1040 form that would fit on a postcard.
Unfortunately, throughout the campaign season, neither of the major party candidates seemed prepared to address these issues in any significant way. Our political system seems to almost guarantee slow change in Washington DC, except when major issues flare up and voters demand action. Please comment on what issues you would like to see the new President and Congress focus on that are important to early retirees?
Image Credit: Washington Post “What if a typical family spent like the federal government? It’d be a very weird family.”