Did you ever see one of those T-shirts that reads, "Be kind to your children. They'll be choosing your nursing home?" This maxim, unfortunately, makes retirement planning sense.
Iowa State University Professor of Economics Dan Otto turned his students loose on the question of balancing the budget and managing the debt ceiling. He says they quickly zeroed in on Social Security, Medicare and Medicaid as unsustainable programs that account for 40 percent of the federal budget and are projected to increase rapidly under current trends. The students agreed that these programs should be reformed or even eliminated. They argued for raising the age of retirement, raising the taxable maximum income ceiling on Social Security and making it easier to save.
At the same time, most of the 19- to 21-year-old students didn't think that they would ever benefit from any of these programs, so they didn't believe it was fair that they should be asked to pay for them. "They have a young person's perspective. They don't believe that they are ever going to get old and sick. If I had to characterize their attitudes, I'd call them Libertarians," says Otto.
Of course, the students didn't always agree with each other. Some had personal experience with grandparents and other older relatives that gave them a different perspective. Ultimately, after much discussion, they agreed on two recommendations that our members of Congress should take to heart:
- Tackle the problems now. Delaying action compounds the costs and increases the difficulties of dealing with issues later.
- Take a bipartisan approach. The causes and consequences of the federal debt and deficit issues are societal issues, and dealing with them will require bipartisan efforts.
The class ended before this issue came to a head, but Otto says that his students got the point - solving the problems isn't easy and that made them frustrated -- just like the rest of us.