Report: More Americans Than Ever Rely on Government Assistance
Over the past 50 years, the percentage of Americans who rely on government programs to subsidize their income has ballooned to record numbers, according to a new study. The bipartisan think tank Economic Innovation Group (EIG) says that 53% of Americans draw at least a quarter of their income from government aid (also known as transfer income). This includes programs like Social Security, Medicare, Medicaid, the earned income tax credit, Pell grants, and COVID-era payments.
Research shows that in 1970, only 1 percent of the country relied that heavily on government money. Most of these were in the country’s poorest counties. Researchers believe that the three main forces fueling the “Great Transfer-mation” are:
- An aging population
- Rapidly rising healthcare costs
- Growth in other earnings just hasn’t kept up
According to the study, one in six Americans is age 65 or older. In 1970, one in ten Americans was aged 65 or older. That translates into a huge increase in Social Security payouts. Older populations also tend to need more health care, so Medicare spending has significantly increased. Further, the study indicates that personal income (wages, benefits, etc.) has grown so slowly, transfers make up a higher percentage of people’s total income.
Another big reason causing the transfer of income is the demise of so many manufacturing jobs in the United States. Areas that relied on manufacturing jobs saw massive increases in government reliance.
EIG said the problem is on track to keep getting worse as more Social Security and Medicare payouts raise the deficit. However, that money fuels a big part of the economy.
“The country is on a collision course with politically fraught trade-offs,” the report warns. “Significantly raising taxes and dramatically cutting transfer programs could choke off the very economic activity that finances transfers and (impoverish) the lives of people who depend on them.” The study indicates that the best way out is faster economic growth and doing whatever is possible to restore America’s “demographic vitality.”
Social Security’s funding shortfall
Millennial couples are at risk of losing $908,000 in lifetime Social Security benefits if Congress does not address the program’s funding shortfall, according to a new report by HealthView Services, a software company that provides retirement healthcare data to financial advisors. The report reviewed several Social Security reforms and calculated the financial impact on future retirees. Researchers warn that the cost of doing nothing would have the most significant financial consequences. If we do nothing, retirees could see their benefits decreased by 21% in roughly a decade if Congress fails to take action.
Talk to a Virginia Beach Elder Law and Estate Planning Attorney Today
The Law Office of Angela N. Manz represents the interests of older Americans who are in need of estate planning services. Our firm specializes in helping older Americans apply for long-term care needs, organize their estates, and ensure they have enough money to continue to receive necessary healthcare services. Call our Virginia Beach elder law attorneys today to schedule an appointment, and we can begin discussing your next steps right away.
