Shop at a Target or Walgreens and notice a 70-something gal or guy behind the counter? Most likely they didn't take this low-wage job because they were bored in retirement, but because they were running out of money.
More than one million Americans age 75 or older still work, according to a 2007 report by the Department of Labor -- including more than 300,000 who are 80 or older. The Bureau of Labor Statistics projects that by 2020, 28% of women age 65-74 will be working along with 35% of men, according to the Stanford Center on Longevity -- most likely because of shrinking retirement benefits.
What boggles my mind is that despite the fact that the vast majority of Americans can't afford to retire some policymakers and politicians -- including President Obama -- are considering cutting Social Security benefits. The Committee for a Responsible Federal Budget has suggested that Social Security needs to be trimmed because it's "currently on the road to insolvency." In a paper on its website entitled Social Security Reform and the Cost of Delay, it calls for severe cuts: "If policymakers were to act (abruptly) today, a 16.5 percent across-the-board cut for all beneficiaries would achieve solvency for the next 75 years. Waiting 10 years would require a 19 percent cut, and waiting 20 years would require a 23 percent cut."
But even a 16.5% cut would squeeze an already-meager retirement check. The typical Social Security benefit is $307.50 a week or $7.68 an hour, slightly more than the federal minimum wage of $7.25 an hour. Even those making more than $110,000 a year can only count on $29,000 a year in Social Security Benefits. For the vast majority of Americans, Social Security provides the majority of their retirement savings -- and it's still not adequate, given that more Americans are still paying mortgages in retirement and most are coughing up more than $6,000 a year in Medicare/Medigap premiums. Not only does more than half of the population work for companies that don't offer a pension or a 401(k) plan but even most of those who spent their careers working for a company with the less-generous 401(k) plan have only accumulated about one-fifth of what they need.
According to the Employee Benefit Research Institute's 2013 Retirement Confidence Survey, 57% of households reported that they had less than $25,000 in retirement savings, including 28% with less than $1,000. I fit into the latter category, having accumulated no retirement savings outside of Social Security despite spending 20 years in the workforce -- including working for one of the largest newspaper chains in the country and a household-name bond rating firm. If I were single, I'd be toast.
"Baby boomers are the first generation without the safety net of pensions and other benefits their parents have," said Alicia Munnell, director of the Center for Retirement Research at Boston College. "They're facing a much more challenging old age."
For more than two years, President Obama has endorsed reducing Social Security payments to trim the debt, according to the Washington Post. But Sen. Elizabeth Warren -- viewed by supporters on the left as a potential 2016 presidential candidate -- endorsed increasing the benefits.
"The absolute last thing we should do in 2013 -- at the very moment that Social Security has become the principal lifeline for millions of our seniors -- is allow the program to begin to be dismantled inch by inch," Warren said recently on the Senate floor.
Sen. Tom Harkin of Iowa agrees. "The first Obama administration was focused too much on saving the banks and Wall Street," said Harkin, a liberal and advocate for would-be retirees who is retiring after four decades in Congress. "There's going to be a big populist push on whoever's running for office to espouse these kinds of progressive policies."
While I consider myself knowledgeable about 401(k) plans, I'm still researching the best fix for Social Security. In the meantime, I strongly believe that cutting benefits should not be an option. Find out more about what you can do on Warren's website.