A recent Prudential webinar focusing on the state of 2020 highlighted stressors on retirement security, with an emphasis on Social Security and student loan debt.
“Prudential: 2020 Pandemic, Protests and Politics” featured experts from both sides of the political aisle. Paul Begala, a political strategist, commentator and former adviser to President Bill Clinton, discussed ideas from the Democratic side, while Mark McKinnon, a political strategist, commentator and past adviser to President George W. Bush, spoke from the Republican point of view.
The political strategists discussed Social Security and the effects of President Donald Trump’s executive order implementing an optional payroll tax deferral. Concerns about Social Security’s lifespan have risen over the years, but the recent deferral option has made some experts worried that there could be a new, quicker depletion date—as early as 2023. “We’re 36 months away from bankruptcy,” exclaimed Begala in the webinar. “When you stop taking revenue, you stop taking money, and Social Security is a vital part of that. It’s one of the great advancements in America, yet Trump is going to do away with it in three years if he doesn’t do something about this.”
McKinnon countered that argument, saying that while Social Security has been a “third rail” issue since its enactment, there are solutions to prevent insolvency. One he suggested is raising the eligibility age, arguing that American workers and retirees are stronger and more able-bodied than in prior decades. Today, the age to begin claiming Social Security starts at either 65 or 66, depending on a person’s birthday. “There’s got to be a discussion about reforming entitlements, where we talk about the idea of raising the eligibility age,” McKinnon said. “It’s different to be 65 today than it was 20 years ago.”
The two also touched on college debt and its impact on short-term and long-term savings. While Begala said he is against the concept of free college, because he believes individuals do not need a college education to succeed in the workforce and that most meanings of “free” are invaluable, he introduced the idea behind trading service work for tuition stipends. Similar to the Peace Corps or AmeriCorps—which Begala said he helped create under Clinton’s tenure in 1993—students would dedicate an allotted amount of time to a service program and would essentially earn tuition dollars through work. “Younger people are going to college, yet many are still unemployed and in debt,” Begala said. “While some of us aren’t cut out for the Peace Corps or AmeriCorps, everyone can do service.”
McKinnon agreed with this idea, adding that as many students take a gap year or two before college, working in service fields for tuition stipends—particularly in the time of COVID-19—minimizes the future debt on their shoulders. “There’s no downside to this,” he said. “It makes a ton of sense, especially during COVID. This is a great time for young people to take time off and do some service.”
Funding, eligibility requirements, service categories and the average tuition dollars earned for hours worked would be some of the many marks to check off before a nationwide program could be implemented.
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