JustCare

Tag: Retirement security

  • Raising the minimum wage helps workers and Social Security

    Raising the minimum wage helps workers and Social Security

    The minimum wage has not been adjusted appropriately for inflation over the last several decades, while core expenses such as housing and health care have increased significantly. As a result, minimum wage workers do not make a living wage. Social Security Works just issued a report that explains why increasing the minimum wage to $15 an hour provides greater economic security to workers and their families both today and over the long-term in the form of higher Social Security benefits.

    The report finds that a $15 minimum wage will increase Social Security benefits for workers by as much as $5,000 a year. At the current minimum wage, Social Security monthly benefits are $979.80 for people at their full retirement age and $685.80 if they retire at 62.

    At a $15 an hour minimum wage, the monthly benefit would be $1,409.60. Each additional dollar in wages increases a worker’s Social Security benefits. Today, 1.7 million workers earn the $7.25 an hour minimum wage, and tens of millions of additional workers earn less than $15 an hour.

    The Economic Policy Institute found that a $15 an hour minimum wage beginning in 2025 would help 32 million workers directly or indirectly. Collectively, they would earn an additional $107 billion a year. Additional Social Security contributions would total 6.2 percent of that $107 billion.

    And, there’s more. Once the minimum wage increases, overall wages across the nation also increase. Consequently, the Social Security Trust Fund benefits even more. In addition, retirement security improves with an increase in the minimum wage, helping retirees who too often do not have retirement savings or traditional pensions.

    Increasing the minimum wage also helps older workers, women and people of color. About one in six older workers are paid the minimum wage; one in four older adults rely on Social Security for most all of their income. Women represent 59 percent of the population benefiting from an increase in the minimum wage, although women make up 50 percent of the workforce. More than three in ten Black Americans would benefit from the increase, although they make up 13 percent of the workforce.

    About one in eight older adults live in poverty today. More than four in ten older adults have incomes under 200 percent of the Supplemental Poverty Measure. The numbers are projected to go up.

    In sum, increasing the minimum wage is a much-needed reform that voters overwhelmingly support and that would benefit a large swath of the population and their families. The House COVID-19 relief bill included this increase. However, because the Senate Parliamentarian ruled that increasing the minimum wage is not directly related to the budget and should not be part of a budget reconciliation bill, it is no longer in the Senate relief bill. The Senate has the power to ignore the Parliamentarian’s ruling or to replace the Parliamentarian. But, Majority Leader Schumer doesn’t have the desire, it appears. Nor does President Biden. What will it take for a Democratic Congress and president to increase the minimum wage?

    Here’s more from Just Care:

  • Retirement security is not improving

    Retirement security is not improving

    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.

    Here’s more from Just Care:

  • Nearly half of older households have no retirement savings

    Nearly half of older households have no retirement savings

    A new GAO report, based on a Survey of Consumer Finances from 2017, finds that nearly half of all households headed by someone 55 or older in the US have no retirement savings. Most households have low retirement savings. The US retirement system needs improving.

    There is a good likelihood that many Americans will outlive their retirement savings. Health care costs and other expenses are keeping people from being able to save pre-retirement. On top of that, an increasing number of people are retiring and living longer.

    At the same time, more and more companies are eliminating pensions and replacing them with one-time payments that are worth far less. The Treasury and Labor Departments, which oversee these employer plans, are not focused on protecting workers’ retirement security, reports Josh Gotbaum for The Atlantic.

    President Trump recently issued an executive order that calls for expanding workplace retirement plans as a way to strengthen people’s retirement security. But, there are already thousands of these retirement plans. The executive order is, in fact, a gift to Wall Street. It gives financial-services companies more ways to collect workers’ money and receive fees for their work. It does nothing to ensure that Americans can retire with dignity.

    Americans should demand retirement security from our elected officials. Social Security needs strengthening as Senator Bernie Sanders and Congressman John Larson have proposed. The Social Security 2100 Act would fully fund Social Security for the rest of the 21st century. No Republicans are co-sponsors.

    If you want Congress to expand Social Security, please sign this petition.

    Here’s more from Just Care:

  • Rescuing retirement with Social Security plus

    Rescuing retirement with Social Security plus

    In an article for Politico, Jacob Hacker lays out his vision for rescuing retirement–universal private retirement savings that become a defined benefit upon retirement, an annuity paid by Social Security –“Social Security Plus”–on top of Social Security benefits.  How much would this help working people in retirement?

    Hacker explains that as a result of flawed social policies over the last 25 years, government and businesses have laid tremendous economic risk onto working people and their families. Among other things, unions have lost their influence, companies have been less caring of their workers. As a result, people are at risk in their jobs, their health, their education and their shelter.

    Hacker describes this change as the Great Risk Shift. And, he says retirees have been hit particularly hard. No longer do most retirees have a defined pension. At best, if they are lucky, they might have a defined pot of money that can get wiped out by a market crash, which does not guarantee them set benefits. On top of that Social Security benefits have shrunk as a percent of retiree income from 50 percent at the end of the 20th century to 40 percent in the next several years.

    Today, it is projected that the majority of young workers will not be able to continue to live as they have while working when they retire. For that they need about 70 percent of pre-retirement income. In 1983, less than a third of them were at risk of not maintaining their standard of living in retirement.

    Inadequate retirement savings hurts retirees as well as the US economy. And, according to Hacker, the solution needs to be a resetting of the risk, not an admonition to people to save more. People need to be in a situation where they can save more automatically. They also need government protection of these savings, just as the government does with Social Security.

    Hacker has a plan, which includes these two smart solutions. Instead of the government subsidizing the retirement savings for the wealthy to the tune of some $200 billion a year through tax-deferred accounts such as 401(k) plans, the government should take that money to encourage retiree savings for people with lower incomes. He further suggests that Congress should expand Social Security by raising or removing the cap on payroll contributions and requiring contributions on investment income.

    Hacker also argues that Social Security benefits should be higher for vulnerable populations. And, rather than raising the retirement age, which hurts low-wage workers in particular, we should allow people to retire early but offer greater benefits if they can delay retirement.

    Hacker then makes the case that 401(k) savings plans should be universal. All workers should be able to take advantage of them. Today many are not. Hacker wants to require everyone to contribute to 401(k) plans to help ensure people save enough, with some opt out rights. But, his plan as described in Politico does not take into account that many, if not most, working people do not have any disposable income to spare.

    Hacker recommends that the $200 billion that subsidizes retiree savings of wealthy people today to go to match savings of lower-wage individuals. But, if these individuals cannot afford to save, his plan is of no help to them. Moreover, to the extent workers are able to save, 401(k) fees can eat into retiree savings significantly.

    To protect worker savings as much as possible, Hacker argues that 401(k) and IRA investments should be in low-cost index funds. On top of that, Hacker proposes turning these retiree savings into a defined benefit plan upon retirement, with guaranteed monthly income for life–essentially an annuity paid by Social Security–“Social Security Plus.” Hacker says that “We should make [Social Security Plus] the model for a transformed private system that actually provides retirement security.

    The unanswered question is how will this plan help the millions of workers who cannot afford to put money into a 401(k) plan? Removing the cap on Social Security contributions and allowing people to invest more money in Social Security in order to enhance their Social Security benefits seem like simpler and more compelling solutions for improving retirement security.

  • Trump’s Budget Director prepared to gut Social Security

    Trump’s Budget Director prepared to gut Social Security

    President Trump’s Budget Director is not standing behind President Trump’s repeated campaign promise to protect Social Security. This is no surprise. Trump chose Mick Mulvaney as  director of the Office of Management and Budget (OMB), notwithstanding Mulvaney’s historic commitment to gutting Social Security and Medicare.

    Vox reports that at Mulvaney’s Senate confirmation hearing, instead of supporting President Trump’s promise to not touch Social Security, Mulvaney spoke about his belief in the need to cut Social Security. In response to a question about the sharp contrast between his position and the President’s claimed position, Mulvaney said: “The only thing I know to do is to tell the president the truth.”

    To be clear, Mulvaney’s view of the “truth,” would be deemed by many to be far from the truth. Just as we have the ability to fund the Pentagon and to support deep tax cuts for the wealthy if we so choose, we have the ability to raise taxes on the wealthiest Americans and use that money to shore up Medicare and Social Security for all Americans.

    Mulvaney wants to raise the age of Social Security eligibility, leaving people in their early sixties who are unable to find gainful employment with little if any retirement security.

    If you believe that we need to expand Social Security, please sign this petition.

    Here’s more from Just Care:

  • Social Security critical for middle-class retirees

    Social Security critical for middle-class retirees

    We all know that Social Security is critical for the well-being of people over 65 with low incomes and assets. A new report from the Social Security Administration reveals that Social Security is also critical to the economic and retirement security of nearly 70 percent of middle income people over 65.  (Social Security defines the middle class as people in the three middle quintiles of the income distribution, between $28,000 and $109,000 for married couples and between $11,000 to $41,000 for individuals.)

    Here’s some eye-opening data:

    • Social Security represents more than 50 percent of total retirement income for almost seven in ten middle-class older Americans.
    • For nearly 50 percent of middle-class retirees who are married, Social Security represents their chief income source. And, Social Security represents 90 percent or more of the income of more than 10 percent of older married couples.
    • For more than 80 percent of single middle-class older Americans–including widows and divorced men and women–Social Security represents their chief income source. And Social Security represents 90 percent or more of the total income of nearly half of them.

    Social Security: Main Source of Retirement Income for Most Middle-Class Beneficiaries

    According to the Center on Budget and Policy Priorities, Social Security keeps more than four in ten older Americans from falling below the poverty level. Even with Social Security, 9 percent of them are pushed into poverty because benefits are not generous enough to afford them adequate economic security.

    If you want Congress to expand Social Security, please sign this petition.

    Here’s more from Just Care:

  • Social Security payroll contribution key, but cuts proposed

    Social Security payroll contribution key, but cuts proposed

    Last week, the Associated Press reported that President Trump’s team is considering ending or cutting the Social Security and Medicare payroll contributions as a way to “help” working class Americans. But, these payroll contributions are key to ensuring health and retirement security for working Americans. Cuts would put Social Security and Medicare at risk.

    As Michael Hiltzik points out in an opinion piece for the Los Angeles Times, payroll contributions protect Medicare and Social Security from political attack.  In Franklin Delano Roosevelt’s words,  ““We put those payroll contributions there so as to give the contributors a legal, moral and political right to collect their pensions. … With those taxes in there, no damn politician can ever scrap my social security program.”

    Payroll contributions from every worker for Social Security and Medicare turn these programs from welfare programs–which never cover all the people eligible, let alone in need of them–into social insurance programs with earned benefits for everyone. Payroll contributions allow the Social Security Trust Fund to cover the full costs of Social Security benefits. Social Security pays for itself, without dipping into general revenues or contributing to the deficit.

    If Social Security contributions were eliminated or cut significantly, Social Security benefits would need to come in whole or in part from general revenues. A Congress committed to gutting Social Security could easily do so by cutting taxes and reducing revenues or reallocating monies away from Social Security to different priorities.

    Even with Social Security having the monies needed to pay benefits for the next 17 years until 2034, Congressional leaders argue that Social Security is “unsustainable” and needs cutting. At the same time, a majority of the public supports Social Security expansion, including lifting the cap on Social Security contributions to ensure Social Security’s ability to pay benefits over the next 75 years.

    Social Security is needed now more than ever to ensure the economic and retirement security of Americans. If President Trump were listening to the people who supported him, putting aside the people who did not, he would know that we should be expanding Social Security benefits, as 157 House members have recently proposed. We need to increase Social Security benefits and lift the cap on contributions–now at $127,200–so that the wealthiest Americans contribute to Social Security at the same rate as everyone else.

    If you want Congress to expand Social Security, please sign this petition.

    Here’s more from Just Care:

  • House bill to expand Social Security responds to what public wants

    House bill to expand Social Security responds to what public wants

    Last week, Congressman John Larson of Connecticut, and 156 other congressional Democrats reintroduced a bill in the U.S. House of Representatives to expand Social Security benefits. (There were 157 original sponsors, including Larson.  In just the last few days, one additional member has joined.)  More than 80 percent of the Democrats in the House sponsored the bill, responding to what the public wants. Right now, there are no Republican co-sponsors. Will Republicans sign on?

    The Social Security 2100 Act, H.R. 1902, would ensure that Social Security had the funding to pay more generous benefits in full through the end of this century. Beginning in 2018, it would increase Social Security benefits for everyone by around 2 percent. It would also rely on an annual cost of living adjustment specifically geared to reflect the spending patterns of older people.

    Today, the Social Security cost-of-living adjustment does not properly reflect increasing costs to older adults and people with disabilities. It does not take into account that they use far more health care services than working people, and health care cost inflation is greater than other costs.

    The Social Security 2100 Act would address our retirement crisis, helping to ensure the retirement security of tens of millions of Americans currently at risk of not being able to meet basic needs once they stop working. It sets the minimum benefit for Social Security at 125 percent of the federal poverty level. It affords working families greater economic security, strengthening the middle class.

    In recognition that Social Security’s old age, disability, and survivor benefits are intertwined, generated from a common benefit formula, the Larson bill combines its two trust funds into one.  This is a commonsense, long overdue change that simplifies and streamlines Social Security.

    The Social Security 2100 Act pays for all the improvements, while restoring the program to long-range balance by requiring the wealthiest Americans–the top 0.4 percent–to make Social Security contributions on earned income over $400,000 and by gradually increasing the Social Security contribution rate by 1.2 percent, from 6.2 percent to 7.4 percent, between 2019 and 2042.  That amounts to a .05 percent increase each year–or the equivalent of 50 cents a week for someone earning $50,000.  Polls and surveys show that Americans are willing to pay more to ensure that Social Security remains strong.

    If Republicans listen to their base, their constituents, the people they represent in Congress, they will join with Congressman Larson and the Congressional Democrats supporting this bill, helping to improve economic security in America.

    If you want Congress to expand Social Security, please sign this petition.

    Here’s more from Just Care:

  • American Savings Act would help promote retirement security

    American Savings Act would help promote retirement security

    Nearly 70 million Americans do not have access to a retirement savings plan through work. But, every federal employee, including every member of Congress, has access to the Thrift Savings Plan, to promote retirement savings and ensure their retirement security. What if everyone had access to the Thrift Savings Plan? The American Savings Act, a bill in Congress sponsored by Senator Merkley, would promote “a more secure retirement future” for everyone without a retirement savings plan.

    Federal employees are automatically enrolled in the Thrift Savings Plan, which has low fees and clear and simple investment options. So, most of them have retirement savings. But, one in three working-age Americans report having no retirement savings whatsoever.

    To help encourage everyone in America to save for retirement, the American Savings Act would automatically enroll everyone without an employer retirement savings plan. Employees can decide how much to set aside for retirement up to $18,000 a year. 

    The American Savings Act would give everyone access to universal, simple, portable American Savings Accounts, personal retirement savings plans.  To read the full bill, click here.

    Here’s more from Just Care on retirement security:

  • In retirement, income gap worsens for women

    In retirement, income gap worsens for women

    We know that women earn 79 cents for every dollar men earn. A new report from the Institute on Retirement Security reveals that in retirement the gap in income widens.  And, over time, the retirement income gap only worsens for women. As a result, women are much more likely to suffer financially in retirement than men.

    Older women live on just three-quarters of the retirement income of men. As a result, they are 80 percent more likely to be impoverished than men. And, by the time women are 80, the income gap widens, with their median income just 70 percent that of men, $26,470 to $38,040.

    Women receive one third less in retirement income from a pension, $12,000, than men, $17,856.  And, they save 34 percent less in their 401(k) type retirement plans, $24,446, than men, $36,875.  Because they have a longer life expectancy than men, they are at greater risk of depleting all their retirement savings.

    On average, women receive lower Social Security benefits than men. Yet, for women with annual incomes under $80,000, Social Security is a key source of income. Without Social Security, almost half of all older women would be living in poverty. Social Security represents the majority of income for single, widowed and divorced women over 70.

    Almost two out of three older adults living in poverty are women.

    What do we do about it? The authors suggest increasing Social Security benefits for women. (There was no increase in Social Security benefits in 2016. The U.S. offers stingy Social Security benefits as compared to other countries. To be sure, there is strong support for Social Security across a broad swath of Americans. And, here, you can watch Robert Reich explain that we can afford to expand Social Security.)

    The authors also recommend auto-IRAs to increase retirement plan coverage, expanding use of the Saver’s Credit and state-sponsored savings plans, which could help make up for the fact that 68 million working people do not have access to a retirement plan through their jobs. (Teresa Ghilarducci argues for a Guaranteed Retirement Account, a federally managed savings plan.)

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