Except for the wealthiest Americans, retirement security is not improving. Mark Miller reports for the New York Times on the plight of most older adults since the great recession. Although many parts of the economy have recovered, middle and low-income Americans have largely not seen meaningful growth in their retirement income.
In fact, evidence from the Federal Reserve shows that, at best, middle and lower-income families have managed to recover their retirement savings. And, many middle and lower-income families have not managed to recover their retirement savings.
In addition, Social Security benefits are replacing a lower proportion of people’s retirement income, even though benefits have adjusted up a bit for inflation. The longer wait to reach Social Security’s full retirement age—once 65 and now increasing to 67 for people born in 1960 or later—also operates as a benefit cut. And, Medicare costs are going up.
It is getting harder for baby boomers and GenXers to have adequate resources in retirement. The wealthiest households are doing a lot better today and should be in good shape when they retire. But, middle-income households have as good a chance of success in retirement as of failure. Meanwhile, people with low incomes have a much lower chance of having the resources they will need in retirement.
People who were out of work during the recession also often were without health insurance. Those people who were not yet eligible for Medicare could sign up for coverage through the Affordable Care Act, but at a significant cost. Today, 9.4 percent of people between 50 and 65 are uninsured. That’s largely because 14 states opted not to expand Medicaid.
Medicare spending has risen considerably, in large part as a result of private Medicare Advantage plans, which have been overbilling the federal government and taxpayers for their services. The question is whether Republicans in Congress will succeed at shifting more costs onto older and disabled Americans with Medicare to reduce spending or whether Democrats will succeed at enacting laws that end Medicare Advantage abuses that drive up spending as well as rein in health care prices. Speaker Nancy Pelosi’s prescription drug bill, H.R.3, would save Medicare tens of billions of dollars a year in lower prescription drug costs alone.
The official unemployment rate for people over 55 is at 2.6 percent. But, if you include people who were unsuccessful at finding jobs and have stopped looking for work, the unemployment rate goes up to 5.5 percent. Moreover, wages are not up in the last decade for older people who are working. They are at $872 a week, as compared with $861 ten years ago.
Nearly 80 percent of older adults have equity in their homes that they may be able to draw on if they need money. But, since the recession, fewer older adults own their homes. And, there has been a significant drop in the proportion of people under 65 who now own their homes. They are at serious risk of not having adequate resources to pay for health care and housing costs as they grow older. Today, almost five million older people who own their homes are paying at least half their income on housing costs, forcing them to spend less on food and health care.
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