Expect more holes in social safety net
Americans over 65 in the lowest income groups depend on Social Security benefits for 83 percent of total income, the Government Accountability Office found; middle-income seniors depend on Social Security for 64 percent of total income. Credit: iStock
The social safety net that protects seniors already is frayed, but expect politicians to try poking some new holes in the mesh during the 2012 campaign season.
Lawmakers and presidential candidates have batted around proposals to privatize Social Security, raise its retirement age or reduce cost-of-living adjustments. Medicare privatization has been pushed in three or four versions; any of the options would slash the value of benefits by changing Medicare from a program of defined benefits to one of defined contribution levels.
Against that backdrop, it's worth stopping and asking: What is the state of older Americans and our system of retirement? Before the debate kicks into high gear on just how much to shred the safety net, let's consider just how much the recession has ravaged the economic security of seniors:
Meanwhile, Americans are pushing back their expected retirement ages. For example, 15 percent of Americans now tell the institute they expect to work until age 70, up from 11 percent as recently as 2006.
Forty-four percent of full-time workers in their 50s have neither a defined benefit (DB), nor a defined contribution (DC) pension from their current employer, according to GAO.
The Government Accountability Office report was produced at the request of the U.S. Senate subcommittee on Primary Health and Aging of the Committee on Health, Education, Labor, and Pensions. At a committee hearing on the report in October, Sen. Al Franken (D-Minn.) asked one of the report's principal researchers what older Americans reeling from the recession could do to rebuild their retirement savings.
"I wish I knew," replied Barbara Bovbjerg, GAO's director of education, workforce and income security issues, according to a transcript of the briefing. "If you're already retired and you're reliant on a 401(k) or an IRA, you're reliant on the financial markets. You are probably really reducing your spending on other things. You're probably making a significant change to the standard of living."
