In the Dark

In the Social Anxiety column, we round up some of the best writing on Social Security and Medicare from around the Web. (Some links may require registration or subscriptions.)

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IN THE DARK: Most Americans don't know the age¹ at which they will qualify for Social Security benefits, according to a survey on retirement by the Employee Benefit Research Institute. More than half of workers surveyed thought they would be eligible for full benefits sooner than they actually will be, reports Humberto Cruz of Tribune Media Services in an article published on the St. Louis Post-Dispatch Web site. Many Americans still cling to the outdated notion that benefits kick in at age 65. In fact, only about one in five of those surveyed knew the correct age that they would be eligible. The confusion stems from a 1983 law, which calls for a gradual increase in the full retirement age.

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BIGGER FISH TO FRY: In theory, mutual funds would be a great vehicle for the private Social Security accounts that President Bush is pushing, writes Russ Wiles of the Arizona Republic, in an article published on the Cincinnati Enquirer's Web site. Funds are well suited to handle millions of investors with small balances. But fund companies aren't likely to get involved² with Social Security. "Long-term, companies would like to see [private accounts] happen because that would create greater awareness of investing," says Don Cassidy, a senior researcher at Lipper Inc. in Denver. "But it wouldn't be a bonanza for the industry." One problem is cost. Most firms levy $15 in annual expenses for each $1,000, well above the levels likely to be allowed for private accounts. Most fund firms would have to cut fees to unprofitable levels if they wanted to win bids for Social Security accounts. In the end, the mutual-fund industry "has bigger and more profitable fish to fry," Mr. Wile writes. In private-sector retirement plans, mutual funds account for 43% of the $3.5 trillion held in Individual Retirement Accounts and about half of the $2 trillion put away in workplace 401(k) programs.

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HEALTH-CARE ECONOMICS: In health care, "[s]kyrocketing costs and diminishing returns are a prescription for disaster³," writes physician Carol L. Young in the San Diego Union-Tribune. Deep cuts to Medicare will not only be bad for senior citizens, but for all potential patients. Under the current law, Medicare is projected to cut payments to physicians by 26% over six years beginning in 2006; during the same time, the cost of running a physician's office and providing care for patients is expected to rise 15%. If additional cuts continue, more than 38% of physicians would reduce the number of new patients they accept and another 18% would decrease the numbers of existing Medicare patients they see, according to an American Medical Association study. Many physicians "will continue to serve Medicare patients, even to their own financial detriment," Ms. Young writes, "However, as financial realities continue to disrupt the physician-patient relationship, many physicians are forced into these terrible choices by their environment."

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SOCIALLY DEPENDENT: Social Security is the only source of income⁴ for one in five seniors, with the average monthly check at $955. So how do some seniors survive on so little? "They watch every penny, find a job, go into debt or ask for help," writes Bob Moos of the Dallas Morning News. Travel and other retirement "pleasures" don't exist for those relying solely on their Social Security checks, which get consumed by rent, utility, prescription-drug and food costs. Many of the 6.6 million people that fall into this category worked their entire adult lives but never qualified for pensions or saved for retirement. Others saw their nest eggs cracked by bad investments or medical emergencies. Women are prevalent in this group: one in four women over 65 has no income except Social Security. The total number of seniors dependent on the entitlement program is expected to climb as boomers retire. "Too many Americans save too little. Until that changes, more people will reach retirement with nothing but Social Security," says Michael Ettlinger, an analyst at the Economic Policy Institute in Washington.