‘More Detail on Lump-Sum Distributions of Workers Who Have Left a Job, 2006,’ and ‘The Basics of Medicare, Updated With the 2009 Board of Trustees Report’
More Detail on Lump-Sum Distributions of Workers Who Have Left a Job, 2006
More data from SIPP: This article examines workers’ decisions to a take a lump-sum distribution—a one-time payment—from an employment-based retirement plan when changing jobs, while remaining in the labor force. It builds on earlier, top-line data from the 2004 Survey of Income and Program Participation (SIPP). This study provides estimates of the percentage of workers changing jobs and leaving their assets in their former employers’ plan, compares the standard of living of individuals age 55 or older with that of their early 50s, and assesses how the current near-elderly and elderly have fared after making a lump-sum decision.
Average distributions and break-down: As of 2006, 16.2 million workers had taken a lump-sum distribution of their retirement plan assets. The average amount of these distributions was $32,219 and the median (mid-point) amount was $10,000. Almost half of these distributions were for less than $10,000, and 22.7 percent were received from 2004 through 2006. Just over 55 percent went to individuals age 40 or younger, 83.7 percent were received by whites, and 53.9 percent went to females. Recipients ages 61–64 had the highest average amount of any age category, and the average distribution was significantly higher for males than for females.
Leakage: Through 2006, almost half (47.3 percent) of those taking a lump-sum distribution used at least some portion of the money for tax-qualified savings, while 16.9 percent used at least some portion of it for consumption. The other most prevalent uses were buying a home, paying off debt, or starting a business. At least some portion of a lump-sum distribution is more likely to go for tax-qualified savings if the distribution is larger, the recipient is older, male, or white.
The Basics of Medicare, Updated With the 2009 Board of Trustees Report
Share of GDP: Expenditures in the Medicare program equaled 3.2 percent of GDP in 2008 and are estimated to be 11.2 per-cent by 2080. But after 2007, the projected Part B, Supplemental Medical Insurance, and total Medicare expenditures are unrealistically low because of scheduled cuts in physician payments. If Congress blocks these cuts (as it has in the past), the overall Medicare Part B costs would increase—possibly by 4 to 8 percent for 2030 and later, depending on specific changes.
Unfunded obligations: The unfunded obligation of Part B (covering physician care, outpatient hospital services, and independent laboratory services) from program inception through 2083, is estimated to be $23.2 trillion. Medicare costs are projected to exceed those of the Social Security Old Age and Survivors’ Disability Insurance program in 2028 and would be nearly double that of Social Security by 2083.