Pensions expert: health reform will allow earlier retirement
Posted on 13 November 2009
By Mark Miller
Permanent URL of this article: http://retirementrevised.com/health/pensions-expert-health-reform-will-allow-earlier-retirement
Robust health care legislation would enable far more Americans to retire at younger ages, according to one of the nation’s top experts on pensions and employee benefits.
Dallas Salisbury, chief executive officer of the Employee Benefits Research Institute (EBRI) predicted during a media briefing earlier this week that “if we get health reform enacted that assures every individual regardless of status that they can get health insurance at an affordable price, it could allow a lot of people who haven’t been able to retire to do so at earlier ages.”
Salisbury noted that EBRI’s most recent annual Retirement Confidence Survey reflected a significant decline in consumers’ confidence that they will be able to cover their medical expenses in retirement; the finding applied to retirees and pre-retirees alike. “That confidence factor is the clearest predictor of whether someone will retire before age 65,” he added.
Dallas Salisbury, EBRI
Reducing health care cost inflation is a key success factor for reform, Salisbury says. He noted that Medicare premium deductions currently consume approximately 14 percent of Social Security benefit payments, a figure that is projected to soar in the coming years unless corrective action is taken. “Bringing down health care inflation is critical–if reform provides universal coverage and everyone is in system, you can begin to manage costs. That will make Medicare more available to retirees and allow them to retire at earlier ages.”
That line of thinking doesn’t take into account baby boomer intentions to keep working indefinitely, or the idea that keeping older Americans in engaged, productive roles is an economic plus. However, it’s also true that enabling more people to retire could be a positive for short-term jobs growth, since it would open up positions and allow younger employees to move up within their organizations.
“As recently as 2007, employers were talking about phased retirement because they were losing too many people, and they wanted to keep older workers longer,” Salisbury said. “Now, all we hear is that companies can’t get anyone to retire.”Salisbury also offered some interesting reflections on how the economic crash has changed overall American attitudes toward retirement.
“The mythology used to be that you’d work 30 years and then retire with a gold watch. That was true for people who worked in government, and in unionized industries like steel or automobiles, but it was never true for 80 percent of the population. But it was still the base planning assumption that the broad population looked at.
“But in this decade, people adjusted to the reality that had always been true–the new normal was ‘I’m on my own, I wont have a pension, there will be high mobility in employment. But in 2009 it’s changed again–’I'm on my own, I can’t trust promises or institutions–I’m really on my own’.”
That comment waas a bit ironic, considering that the media briefing was convened by Bank of America Merrill Lynch–no stranger to trust issues with the public.
