Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, August 10, 1995                   TAG: 9508100050
SECTION: EDITORIAL                    PAGE: A-12   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

NO NEED TO PANIC, BUT SAVE UP

What advice do government and private economists have for worried workers? Save.

How much? No one knows.

But an oft-cited study by Merrill Lynch concludes that typical baby boomers are saving only about a third of what they will need in retirement to maintain the standard of living they are enjoying while working.

The folks at Merrill Lynch would like everyone to have more savings, of course, and to invest it, preferably with them. Critics of the study point out that it fails to take into account that retirees don't need as much income to live as comfortably as they did when they were raising children, paying off a mortgage, buying furniture and major appliances, and dressing and driving for success.

Which is true - as long as they stay healthy.

Medicare covers many health costs for the elderly. But prescription drugs, which are not covered, often are a huge expense for older people. And if long-term care, also excluded from Medicare, is needed? It can drain a lifetime's savings in a matter of months. The once-secure but now-destitute then fall back on Medicaid to pay for the care they need.

Now Medicare and Medicaid are targeted as budget-busters that have to be reined in. And with good cause: According to a neglected but important report issued last year by a bipartisan commission, the retirement and health needs of an aging population would by 2030 consume every single tax dollar collected by the federal government - unless policies are changed soon.

Assurances that no one is talking about cutting, but merely limiting spending growth of entitlements, are as hollow as they sound. As baby boomers by the millions hit retirement, and health-care costs continue to go up, such limits surely will reduce eligibility and benefits.

The limits will be reasonable, as well as necessary, if they are applied fairly and in concert with health-care reforms. Some sort of means testing for Social Security and Medicare, for example, seems inevitable and is appropriate. So is an increase in the age when citizens can draw their government benefits. In light of steadily advancing life expectancy, the age of eligibility for full benefits ought to be moved up from 65 to 70.

All of this has big implications, of course, for practically every American family. Labor economists warn that, ready or not, the nation's retirement system is evolving toward one based more on personal savings. That's another reason why politicians should deal with Social Security and Medicare reform now rather than deferring hard choices to another decade, after they are safely retired from office. Any sacrifices that change entails should be shared as fairly as possible among generations.

Meanwhile, citizens shouldn't sit around and wait for their elected officials to do the right thing, when officials fear that the right thing might cost them the next election. In politics, that's the worst social insecurity of all. Our advice: Keep well, and save.