Colorado’s growing senior population is not prepared for the harsh realities of retirement. Without regular wages coming in, seniors will need to rely on the limited amount of money they have saved, but close to half the senior population doesn’t even have a 401k.
Social Security Problems
Social Security benefits can provide for $1,000-$2,000 a month (or more if you upped your contributions). However, that might change by 2030. With low birth rates and longer life expectancy, the U.S. age demographic now looks like an upturned pyramid, with seniors on top and children at the bottom. Social Security relies on an active workforce supporting retirees. With a smaller workforce, contributions are not enough to meet the needs of retirees.
The system has been tapping into its reserves for the past decades as replacement levels haven’t been met since the 1970s. Social Security’s $2.9 trillion reserve is expected to last until 2030, with cuts of 20-30 percent on benefits likely to ensue after that. The cuts could mean a more modest lifestyle or even a complete loss of independence.
Medicare Won’t Cover Everything
Seniors automatically qualify for Medicare, but standard Medicare (parts A and B) won’t cover every medical expense. The program will include emergency medical procedures but not extended stays at the hospital. It also won’t cover medication and maintenance or preventive prescriptions. Extended Medicare or Medicare Advantage will cover prescriptions and a portion of hospital stays.
It will also cover non-emergency procedures and devices like Lasik surgery, check-ups, consultations, eyeglasses, hearing aids, and more. However, it will require signing up for private insurance, and that would require prior planning before retirement. Medical costs are one of the leading drains in senior retirement funds, and Denver has a reputation for high medical costs.
Colorado officials are pushing for aggressive measures to deal with pension issues and reduce healthcare costs. In 2019, state-funded assistance for seniors crossed the $1 billion mark. This year’s estimate stands at $1.26 billion. Left unchecked, the amount could double by 2035, costing the state $15 billion in the next 15 years. The state proposes automatic pension contributions for every employee (50 percent of Colorado working families have less than $5,000), with the state providing monitoring and offering technical assistance to employers.
Governor Jared Polis won on the promise of fixing healthcare costs. He signed an executive order creating the Office of Saving People Money on Health Care, with goals to develop proposals to lower insurance costs, increase hospital transparencies, and reduce the prices of prescription drugs. Lawmakers have also passed a reinsurance bill that protected the most vulnerable individuals, lowering their premium payments by 20 percent.
State policies on surprise billings took effect this year, capping charges for doctors and hospital services while also establishing an arbitration process for billing disputes. Legislators also approved the importation of drugs from Canada, particularly insulin.
The state is doing what it can to protect retirees, but workers should also start planning for their retirement as soon as possible. The next decades might be rough ones, but proper planning should enable seniors to retire in comfort.