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Retirement security is not improving

Written by Diane Archer

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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1 Comment

  • …the last full time long term job I had paid only 460$ a week (before taxes and deductions. Even adjusted for inflation since then (2013) it is still far short of the amount mentioned in the above article (508$). Many people like myself worked in such stagnant low wage jobs where, clauses like “at will” allowed admin and management to intimidate workers from asking for raises and/or better working conditions, with the threat of discipline or even termination (the company I worked at often threatened people with the latter using statements such as “if you don’t like it, there’s the door, we can get someone else.”).

    That said, low income workers today are not earning enough to put anything into savings, The few that could, lost everything during the previous recession. I had about two weeks worth of earnings stashed away for emergencies which disappeared in a month after I was laid off and UW was cut off in January of 2014. Also since the demise of the S&Ls in the 1980s a standard savings account from a bank offers little to no interest like it did beforehand. Even those which require a hefty up front investment and minimum balance (often more than the average worker can afford) pay interest that at best, lags behind rather than outpaces inflation, so the value of that account actually shrinks rather than grows over the years. In many ways you are just as well off stuffing what you can afford to save in a mattress.

    Along with company and union pensions pretty much being a thing of the past (save for a few occupations like government, military, and the railroads), this is why many today and in the future will only have Social Security to live on. With rumblings being heard about cuts to the programme, and the spectre of privatisation possibly rearing its ugly head again, many like myself are rightfully worried. Living costs are not going down, while some, like housing, medical treatments, and prescription medications are skyrocketing out of sight.

    Some in government also want to increase the minimum age in some cases all the way up to 70 or even higher. What they fail to realise is that since the recession, ageism has been on the rise. Couple this with automation’s threat to many non and even semi skilled occupations (which usually are filled by older workers who do not hold a degree) and the future looks pretty bleak. Furthermore some people just physically break down (like myself which began in my mid 50s) and no longer can perform work that has demanding physical components. For example I am unable even work a service counter, assembly, or fulfillment position as I cannot stand for hours (let alone frequently bend down, climb ladders to reach stock, handle heavy items, etc.) at a stretch due to severe arthritis and circulatory matters. My right hand is so crippled with arthritis, I have almost no grip with it and am only able to use one finger when typing. This even further reduces what jobs I can qualify for.

    Fortunately I am already on Social Security (Disability which will transition to retirement soon) so I don’t have to be concerned about the age limit. However, what of younger people who may find they have similar issues as they get older? With the Administration looking to make it even more difficult than it already is to qualify for disability benefits. It took me several years appeals and having to get an advocate to finally be approved. For some people the process is even longer, sometimes to the point they pass away with nothing resolved.

    I remember some in the Republican party claiming the ACA promoted “death squads”. In reality, they are the ones who look to kick us all to the curb if not off the cliff with their plans to gut Social Security, Medicare, and Medicaid. along with programmes low income housing funding and SNAP/EBT which we rely on just to survive.

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