Americans planning and saving for retirement have a general understanding that two federal programs exist to assist them during their post-employment years: Social Security (for monthly paychecks to help cover day-to-day expenses) and Medicare (to aid them with health care costs).Â
Scott Galloway, the Prof G Show podcast host, explains his thoughts on Social Security and Medicare long-term viability — and offers some provocative words clarifying his views on funding for the federal government’s safety net programs.
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Many U.S. workers grasp the fact that Social Security was never intended to cover all costs during retirement. Expenses for necessities such as housing, cars, groceries and other bills are simply too burdensome for the average Social Security monthly benefit of about $1,900 to handle.
Other concerns about Social Security include the program’s projected insolvency, which without legislative action could be a reality within the next decade.
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The complexity and cost of Medicare coverage is also a major worry for people planning for retirement. Many are unsure of the real-life impact of the health care decisions they need to make, including whether to choose between Original Medicare and Medicare Advantage (which is provided by private insurance companies and is growing rapidly in popularity).
Similar to Social Security, the long-term sustainability of Medicare and possible changes to its benefits are also a source of stress for current and future recipients.Â
With those thoughts in mind, Galloway recently shared some surprisingly blunt opinions on the future of the two programs and some specific ideas for handling their potential shortcomings.
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Scott Galloway says he does not need Social Security
Galloway, while acknowledging that recent reports project that both programs’Â funds will be depleted in the coming years (Social Security by 2033 and Medicare by 2036), explained that he is not overly concerned about their long-term viability.
He described broadly how he understands the current administration’s view of Social Security (the government’s biggest budget item) and Medicare (its second largest) — and then offered a controversial vision of a possible way forward.
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“Before his first term, Trump promised he would preserve both Medicare and Social Security,” Galloway said. “Trump has maintained that he will not make cuts to the program, nor will he change the retirement age.”Â
“I don’t see any path other than either deficits — which are taxes on the young — or some sort of means-testing for Social Security,” he added.
Means-testing involves taking a person’s wealth into account while deciding on reducing or even eliminating their benefits. In the case of Social Security, if one’s income or assets were to exceed a specified amount, they would lose some or all of their monthly paychecks.
“And by the way, I believe there is no reason that I should have Social Security,” Galloway said. “People say, ‘You pay into it.’ They call it a Social Security tax. There are a lot of taxes I pay where I don’t register the benefits. It’s not called the Social Security Pension Fund.”
The podcast host said he makes $16 million per year and pays the same $9,000 in Social Security taxes that a worker who makes $160,000 annually pays.
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Scott Galloway has blunt words on how the Social Security tax affects young people
Galloway continued this line of thinking with a couple major questions.
“Why on earth are the rich not paying their share to support our seniors?” he asked. “Why on earth should it be a regressive tax on the young? Why? Because my generation has decided that a new gestalt is quite frankly — let me think — to f— young people.”
Galloway further explained his opinion on means-testing:
I think if you have over a million dollars in assets or $100,000 in passive income, you don’t need Social Security or you shouldn’t get it.Â
The majority of people who collect Social Security for a number of years take out two to three times what they put into it. So this notion that I’m entitled to it: No, you’re not. It’s a tax. People who need it are entitled to it. So I think you’ve got to means-test it.
When we invented or implemented Social Security, the majority of people weren’t living to 65. Guess what? Now the vast majority of people are living past 65 and/or working past the age of 65. So we need to means-test it and we need to lift the age.
What should Social Security be?
It should be a safety net for seniors who are no longer working, of a certain age where it doesn’t make sense for them to work, who need the money.That would be fiscal sanity.
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