One place to start is slowly increasing the eligibility age for Medicare and Social Security. In 1930, shortly before Social Security was enacted, average life expectancy for men was about 58 years. The average woman lived to 62. When Medicare was created in 1965, life expectancy was about 67 for men and 74 for women. Today, a woman that turns 65 can expect to live beyond 85. And a 65-year-old man can expect to live beyond 78.
For these programs to be available to future seniors, they must account for this increase in average life span.
Gradually adjusting the eligibility age for full retirement benefits would better account for modern demographics, shore up program finances, and, importantly, increase economic growth. Congress could ensure smooth implementation by exempting Americans 55 and older.
According to the nonpartisan Congressional Budget Office (CBO), smart, gradual eligibility adjustments would decrease Medicare spending by at least 5 percent and Social Security spending by 13 percent. Such reform would also substantially boost the size of the American workforce and expand the economy by over one percent.
Another way to strengthen Medicare and Social Security is by increasing the number of Americans paying into these programs.
Finally, while Social Security and Medicare should remain a central part of our nation's commitment to our seniors, citizens should be given more opportunities to go outside these programs to build a supplemental nest egg.
The CBO itself has called the federal government's current fiscal trajectory "unsustainable" and warned that "unless substantial changes are made to the major health care programs and Social Security, those programs will absorb a much larger share of the economy's total output."
These smart reforms would strengthen these vital public programs and go a long way toward addressing the CBO's concerns. While the government's doors are once again open, our fiscal house remains a mess. Congress needs to get serious.