The Center for Retirement Research at Boston College found that a bit more than half of American workers 30 and older are on a path that leaves them unprepared for retirement, a point made in a piece by Michael Fletcher in The Washington Post. The Center’s director, Alicia Munnell, told him, “There’s a mismatch between retirement needs rising and retirement benefits contracting.” In other words, just as the elderly start to need more money, they’ll have less of it.
Old people are doing very well and don’t need the money:
” Social Security has been America’s most successful anti-poverty program—both alleviating and preventing it,” says Nancy Altman, co-director of the advocacy group Social Security Works. In 1934, before there were national statistics, surveys in New York, Connecticut, and Wisconsin found that nearly half of those over 65 had less than a subsistence income. The Center for Budget and Policy Priorities has estimated that without Social Security, about half of that group today would still have subsistence incomes.
But Social Security’s success in keeping elders out of poverty hardly means that all 40 million Americans over age 65 are rolling in dough. The Medicare Rights Center notes that even with Social Security, half of all Medicare beneficiaries live on incomes of $22,000 or less, and spend one-third of their household income on healthcare.
Pockets of poverty, particularly among older women, still exist. “Aging is the gateway to poverty,” says Teresa Ghilarducci, a pension expert at The New School in New York City. She told me that seniors between 65 and 70 are spending down assets quicker than they should and quicker than they had expected. By age 70, cash flow is getting tight, so they skimp on medicines and miss doctors’ appointments. And between age 70 and 75 they “give themselves a raise by skipping meals,” Ghilarducci says. In very old age, they’ve often used up pension assets and savings.
That’s just when the chained CPI—the much talked-about alternative for calculating Social Security cost-of-living increases and one apparently supported by the White House—begins to pinch.
The chained CPI reduces cost-of-living adjustments over time and saves gobs of money for the government. Its effect on seniors as they age is a different matter. The effect compounds as a person gets older, so by the time someone reaches age 85, he or she would have about $1,139 a year less to live on, according to Social Security Works. That may be trivial to Lloyd Blankfein, but a king’s ransom to a struggling 85-year-old.
Social Security is a generational program:
The lopsided debate over the past three years has focused almost exclusively on Social Security as a retirement program. The media have virtually ignored what else it does. When you consider the survivors’ benefits paid to more than four million widows and widowers, to some two million children whose parents have died, and to breadwinners who become disabled, Social Security becomes more than retirement income. About seven million children live in households that depend on Social Security to support the family. Grandparents are raising thousands of them. In the end, Social Security cuts for grandma and grandpa may affect the money available for food, clothing, after school activities, maybe even college. (It’s worth noting that the child’s benefit that helped pay for college expenses until age 22 ended long ago.)
A young man I met in Illinois not too long ago, who was about to become a father, told me he had never heard of Social Security survivor’s benefits. No one had ever explained that if he died when his child was young, Social Security provided a floor of protection. The Social Security messages from the media had conveyed relentlessly only that the program was in trouble. “It hasn’t been shouted loudly enough that Social Security is a system that works for families and all generations,” says Butts. “Most of the rhetoric is about retirement. It’s amazing how people don’t connect the dots.”
Indeed they don’t. Social Security is a people story if there ever was one, but there have been very few stories about people—the faces that all members of Congress never see. Instead, reporters have preferred to populate their pieces with numbers and repetitious quotes supporting the meme.
It’s amazing, though, what you learn when you do some legwork. At the end of last year I did some of that. For example, I found a 61-year-old woman suddenly thrown on Social Security disability because of a serious heart attack, and a 64-year-old woman forced to take her benefits early because she had no job. Over time these Boomers, who now have so little to live on, would have even less with the lower COLA adjustments called for by the chained CPI. When you see their budgets, you get the point.