Pete Buttigieg has a big new plan to shake up the retirement system

Earlier this year, Pete Buttigieg, the 37-year-old mayor of South Bend, Indiana, noted on the presidential campaign trail, “I know I’m the young guy in the race but retirement is on my mind a lot.”

On Monday, he released a plan that proved it.

The 19-page document is one of the most detailed retirement plans so far from a 2020 contender. Long-term care is at the plan’s center with the South Bend mayor proposing what amounts to a new government entitlement for certain eligible retirees. There are changes to Social Security to make the program solvent for a longer period of time and increase its benefits. And there’s a new way to privately save for retirement that puts employers on the hook to help their workers save.

The challenges facing the retirement system are daunting. They include rising health care costs, a Social Security trust fund that will be depleted in about 15 years, and the fact that only half of American workers participate in a retirement plan at work.

“I am determined to usher in a new era for older Americans that upholds the unshakable promise that every American should be able to maintain a decent standard of living when they retire,” Buttigieg said in a statement announcing the plan.

Mayor Pete Buttigieg after filing his declaration of candidacy papers to get his name on the ballot for the New Hampshire primary. REUTERS/Elizabeth Frantz

A new government entitlement for long-term care

Perhaps the most ambitious part of the plan would create a “a historic and free long-term care program to protect people over age 65” called Long-Term Care America that amounts to an addition to the social safety net.

Here’s how it works: every retiree who needs help “with two or more activities of daily living” would get $90 a day to defray the costs of long term care after some waiting periods based on income. The benefit could be used for things like hiring a home health aide or paying for a nursing home.

The current average Social Security benefit is $1,471 per month. This program, at $90 a day, would be a benefit worth almost double that for the much smaller number of eligible seniors.

The total cost of the plan is unclear. A plan summary notes that 11.3 million people who are currently over 65 will receive benefits from the program at some point in their life. Research cited by the campaign notes that among people who receive long-term care “most will need assistance for less than two years.” The costs of the program would be paid for by greater tax enforcement on the wealthy.

The plan has a range of inducements to encourage seniors to stay at home for their care. That is a feature that Nancy Altman, president of a group called Social Security Works, thinks will help defray some of the cost. "There really are incentives for people to stay at home, as opposed to, the immediate default is spend down, go on Medicaid, and go into an institution," she says adding that currently there is an "unintended bias in the current law towards institutional care.”