Senior Citizens Need a Basic Income

Strangely, many senior citizens need a basic income more than younger people. However, today’s promoters usually portray basic income as a solution for younger people facing technological unemployment and income inequality.

Strangely, many senior citizens need a basic income more than younger people. However, today’s promoters usually portray basic income as a solution for younger people facing technological unemployment and income inequality.

  • 50% of Americans on Medicare had incomes below $26,200 a year in 2016, the Henry J. Kaiser Foundation estimates. To elaborate, Medicare is America’s single-payer health insurance program for seniors.
  • 25% of Medicare recipients had incomes below $15,000 a year in 2016, the Henry J. Kaiser Foundation estimates.
  • The average 2016 income of a white Medicare beneficiary was $30,050, the Henry J. Kaiser Foundation calculates.
  • The average 2016 income of a black Medicare beneficiary was $17,350.
  •  The 2016 median income of a Medicare recipient was $26,200.
  • The average 2016 income of a Medicare recipient who lacks a high-school degree was $14,300.
  • Over seven million Americans over 65 were living in poverty in 2017, the Henry J. Kaiser Foundation, estimates.
  • Consequently, 14.1% of Americans seniors were in poverty in 2017.

25% of Medicare recipients make less than $15,000 a year

Therefore, around 29.85 million American seniors make less than $26,200 year if the Kaiser Foundation’s math is right. To clarify, the Centers for Medicare & Medicaid calculates there were 59.7 people on Medicare in 2018.

Moreover, 14.925 million Seniors make less than $15,000 a year, if we apply the Kaiser math. In the final analysis, a lot of older Americans are hurting financially.

Kaiser’s numbers reflect a majority of older Americans, because most seniors participate in Medicare. Hence, we can classify 50% of seniors as in need of more income.

Why Basic Income Advocates should talk to seniors

Therefore, basic income advocates need to talk to seniors. In addition, basic income advocates like Andrew Yang need to change their schemes to cover seniors.

For example, Yang’s $1,000 a month; or $12,000 a year, Freedom Dividend could raise the income of the average white Medicare recipient to $42,050 a year. In addition, Yang’s scheme will raise the income of the average black Medicare recipient to $29,350 a year.

Importantly, Yang’s scheme could raise the income of the average Medicare recipient to $38,200 a year. To elaborate, the Henry J. Kaiser Foundation estimates the 2016 income of the average Medicare recipient at $26,200.

Consequently, Yang could attract a lot of votes by allowing all seniors to receive the Freedom Dividend. Moreover, I think large numbers of Trump voters will trade their Maga hats for Yang headgear; if they hear about basic income. This could help Democrats, because 52% of Americans over 65 voted for President Donald J. Trump (R-New York) in 2016, The Roper Center estimates.

Americans’ Bleak retirement future

Seniors need a basic income because Americans’ retirement futures are increasingly bleak. Old age could be dismal for many Americans because our retirement system is broken.

“The OASI Trust Fund is projected to become depleted in 2034, the same as last year’s estimate, with 77 percent of benefits payable at that time,” a Social Security Adminisration press release claims. To clarify, the Old-Age and Survivors Insurance (OASI) is another name for the Social Security trust found.

This is frightening because Social Security will be the only income for tens of millions of Americans in 2034.

Most Americans will have nothing but Social Security in retirement

In fact, the numbers show more Americans than ever will totally depend on Social Security in 2034. For example:

  • Only 23% of American workers participate in a pension plan, the Pension Rights Center calculates.
  • Just 40% of American workers participate in retirement savings plans, the Pension Rights Center estimates.
  • 46% of American workers participate in no workplace retirement plan, the Pension Rights Center calculates.
  •  21% of Americans; one in five, admit to having no retirement savings at all, Northwestern Mutual estimates.
  • One in three (33%) of American Baby Boomers; those aged 54 to 74, admit to having under $25,000 saved for retirement, according to Northwestern Mutual.
  • In addition, 10% of Americans admit to having no retirement savings, Northwestern Mutual estimates.
  • The average American will need $1 million for a comfortable old age if she retires at 65, The Street claims.
  • The Pew Research Center estimates there are 73 million Baby Boomers in the United States.
  •  The average individual monthly Social Security payment in 2019 is $1,461, the Social Security Administration estimates.
  •  Consequently, the average annual individual income from Social Security is $17,532.

America is facing an Economic Catastrophe because of the Retirement Crisis

America is facing a retirement crisis that could turn into an economic catastrophe as big as the Great Depression of the 1930s. To explain, the United States will experience a massive drop in economic activity when tens of millions of people have nothing but Social Security.

The cause of the Great Depression was a massive drop in economic activity. Such a drop could occur because older Americans will soon have far less buying power.

For example, how can retailers make money; if millions of their customers are trying to live on $1,461 a month, or $17,532 a year? To clarify, $17,532 a year is the average annual retirement income from Social Security.

Can America Afford a Basic Income?

Under these circumstances, we could need a basic income to keep America’s economy functioning. Thus we need to ask can America afford a basic income?

My answer to that question is yes, if we have the political will to implement it. However, we will have to deal with some enormous numbers in a national basic income debate.

To explain, John Quiqqin estimates a basic income will cost between 5% and 10% of a country’s gross domestic product (GDP). Meanwhile, Trading Economics estimates the US GDP at $19.391 billion for 2017. Hence, a US Basic income could cost between $969 billion and $1.9291 trillion a year.

To elaborate, Quiggin is an economics professor at the University of Queensland, The Guardian reports. Moreover, Quiggin was discussing a universal basic income scheme for Australia. However, I think Quiggin’s estimate is a good parameter for a basic income in the United States.

Can America Pay for a Basic Income?

Thus America could pay for a basic income with a 5% or 10% value added tax (VAT). Moreover, I believe a basic income could drive more economic growth by putting the cash into the hands of the people most likely to spend it.

In addition, I think America’s current economic growth rate could cover part of the cost of a basic income. To clarify, America’s GDP grew at rate of 3.2% during 1st Quarter 2019, the US Bureau of Economic Analysis (BEA), calculates.

Hence, I think America could pay for a basic income. Moreover, a basic income can grow the economy by giving average people cash more to spend on Main Street.

Why Americans Need a Basic Income

In the final analysis, I believe a basic income could help America avert an ugly inter-generational political war. To explain, our current retirement mechanism; Social Security, only benefits older Americans at the expense of younger Americans.

In fact, a withholding tax on most American workers’ salaries funds Social Security. However, only those over 65 receive the benefits. Hence, younger Americans have no reason to raise Social Security taxes. Meanwhile, older Americans have a strong incentive to raise taxes on younger people.

On the other hand, people of all ages will receive a basic income. Thus, most Americans could pay more taxes to fund a Freedom Dividend.