Please ensure Javascript is enabled for purposes of website accessibility

5 Ways Mike Bloomberg Plans to Protect Seniors

By Maurie Backman - Feb 17, 2020 at 8:28AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here's the scoop on Bloomberg's just-released plan to ease the financial burden that's often associated with retirement.

On February 16, Democratic presidential candidate Mike Bloomberg released a plan to shore up retirement on a national level. The plan is rooted in the idea that seniors shouldn't have to live out their golden years grappling with financial distress. Here are some highlights that retirees will benefit from should this plan come to fruition.

1. A new minimum Social Security benefit and stronger cost-of-living adjustments

Many seniors are forced to live solely on Social Security, and those who do tend to struggle financially. Bloomberg plans to implement a new minimum benefit that would result in a substantial income boost for a good 10% of recipients today. Bloomberg also plans to change the way cost-of-living adjustments are calculated so that seniors are able to retain more buying power in the face of inflation. Currently, benefits are doing a poor job of keeping up with rising costs, particularly healthcare costs.

Smiling older man sitting on bench outdoors.

Image source: Getty Images.

2. A government-backed retirement savings plan

Workers who want to save for retirement today are limited to either a 401(k) through their employers or an IRA. In both accounts, individual savers take on the risk associated with investing their nest eggs, and also lose money to costly fees that eat away at their returns.

Bloomberg plans to create a public-option retirement savings plan with automatic employer and employee contributions for workers who do not participate in a retirement plan or have a pension through work. This new savings plan will include a government match for low-income workers (similar to the employer match workers often receive in a 401(k) plan). The plan will also automatically invest savings in suitable target-date funds and automatically enroll savers in low-cost, inflation-indexed annuities at retirement age. And workers who participate in this savings plan will have the option to access a small portion of their funds for near-term emergency expenses without penalty -- an option that generally doesn't exist with IRAs or 401(k)s.

3. Lower costs and expanded coverage under Medicare

Currently, Medicare beneficiaries have no limit on out-of-pocket spending for medications. Bloomberg plans to implement a cap on those costs to the tune of $2,000 a year. He also intends to expand Medicare to cover services like dental care, hearing aids, and vision exams -- services the program won't pay for at present.

4. Affordable long-term care options

The current average costs associated with long-term care can be downright catastrophic. Bloomberg will work with states to develop new programs that provide support services to seniors needing long-term care at home to help minimize their costs while allowing them to age with dignity.

5. Protection against reverse mortgages

For many seniors, home equity is the only means of getting access to money when they need it. The result? They sign up for reverse mortgages, which are notorious for high fees, complex rules, and the predatory salespeople who push them. Bloomberg plans to develop products that work similarly to the reverse mortgage, but are much more financially friendly for seniors. He also intends to provide more advisory services to improve financial literacy among seniors and spare them from making bad choices. And he plans to promote state programs that allow low-income seniors to defer property taxes, leaving them with more income to pay their bills.

It's too soon to know how the upcoming election will pan out and whether Bloomberg's ideas will become reality. But for now, seniors may be interested to know his plans for their fiscal health.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
394%
 
S&P 500 Returns
127%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.