Category Archives for Retirement

Survey: Many Put Retirement on Hold

Published in Woonsocket Call on May 15, 2016

The Associated Press (AP)-NORC Center for Public Affairs Research, funded by The Alfred Sloan Foundation, released a study this month that finds that departing the workforce at the traditional retirement age of 65 is no longer a reality for most older Americans. This new study extends the research of an earlier 2013 retirement study to look at efforts made by older workers to improve career skills and their plans to adjust the parameters of work in later stages of their work life. It also takes a look at a variety of implications of the trend of working longer along with the motivations for doing so.

The 10 page report, released on May 10, 2016, finds that there are large numbers of older Americans who are currently, or who expect to be, working longer. However, researchers caution that this does not necessarily mean that older workers are continuing with the same employment circumstances indefinitely. Many are either reducing their hours to part-time status or are planning to switch to a new employer or even a new field. (The AP-NORC study confirms the findings of an AARP retirement study reported in my September 14, column, entitled “Still Getting the Job Done” that noted “new retirement activity.”)

The Graying of America’s Work Force

The AP-NORC survey comes at a time when the size of the nation’s older population is larger than it has ever been and projected to keep growing, say the researchers. Between 2003 and 2013, the number of Americans age 65 and older rose from 35.9 million to 44.7 million. In the next quarter century, this number is expected to rise to 82.3 million. The percentage of the overall population that falls within this group will rise from 14.1 percent in 2013 to 21.7 percent in 2040, notes the study.

“The circumstances and future plans of older Americans must be well understood by decision-makers,” said Trevor Tompson, director of The AP-NORC Center. “Not only are older Americans going to work longer, but 4 in 10 respondents are planning to change career fields in the future. These results point to significant changes in the American workforce with impacts likely felt by workers and employers.”

No Plans for Retirement

Here is a sampling of key findings reported in The AP-NORC’s “Working Longer” study:

According to the survey, a quarter of older workers say they plan to never retire, with this response being more common among lower-income workers than higher-income workers. Specifically, 33 percent of those earning less than $50,000 a year saying they will never retire, compared with 20 percent of those who earn $100,000 or more.

The findings also indicate that more than half of older workers plan to be employed past the traditional retirement age of 65 or already have worked past this age. Additionally, six in 10 older workers age 50 to 64 plan to work past the age of 65. Nearly half of those who are 65 and older say they already work or plan to work during this later stage of life, notes the study.

The study reveals that members of the workforce who are age 65 and older are not limiting themselves to occasional work–this group reports an average of 31 hours per week in the workplace.

Additionally, more than 4 in 10 Americans age 50 and older have spent at least 20 years working for the same employer at some point in their careers. These workers are more excited and less anxious about retirement than those without such long histories with a single employer, says the study..

The findings also show that a majority of the older Americans who are planning to remain in or rejoin the workforce are planning to switch either professional fields or employers in the future. Those who are age 65 and older are especially likely to plan a change. In addition, a sizeable minority of older workers are taking steps to keep their skill sets fresh by pursuing job training or additional education.

Finally, a quarter of adults age 50 and older have looked for a job in the past five years. Many of them are encountering difficulties in the job market, with a third reporting that it has been so difficult that they’ve given up looking at some point during their search.

Fear of Outliving Retirement Savings

“One could say that the [The AP-NORC] survey simply leads us back to the same ‘old’ story,” said AARP Rhode Island State Director Kathleen Connell. “But what is ‘old’ and what are we going to do about it? The survey provides more data to underscore the need for policy changes as well as a refocusing on employment and retirement. In a single generation, the world has changed. On the upside, the numbers reflect people in better health working longer, and many of those folks continue to be fulfilled in their jobs. But we all know that for most people this trend stems from the fear of outliving savings, often compounded by the inability to save substantially for retirement.

“Worries about Social Security are in the mix, also, as people worry that benefits someday may not cover the cost of housing, food and healthcare. The thought of any future reduction in Social Security benefits is daunting. That’s why AARP continues to ask presidential candidates to ‘Take a Stand,” by providing specific plans to address necessary changes in the program. As we have been saying, doing nothing is not an option.

“One of the encouraging trends revealed in the survey is that many workers over 65 say they are certain that they will change jobs or careers before they retire. It says to me that the message is kicking in that reaching what we once accepted as ‘retirement age’ no longer holds people back.”

A total of 1,075 interviews were conducted for this AP-NORC survey with adults age 50 and older representing the 50 states and the District of Columbia. Interviews were conducted in English and Spanish. The combined response rate is 14.2 percent. The overall margin of sampling error is +/- 3.9 percentage points at the 95 percent confidence level, including the design effect. The margin of sampling error may be higher for subgroups.

GAO Report Reveals Social Security Benefits Gap between Rich, Poor

Published in Woonsocket Call on May 1, 2016

We intuitively know that there is a growing income gap between America’s rich and poor. We heard it for months during the presidential democratic debates. But a newly released GAO report documents this charge, the disparities and their impact on Social Security Benefits.

Growing disparities in life expectancy between America’s rich and poor is eroding the progressive nature of Social Security. A new Government Accountability Office (GAO) report, “Shorter Life Expectancy Reduces Projected Lifetime Benefits for Lower Income,” requested by Senator Bernie Sanders, shows that low-income American men (making about $20,000 a year) will lose 11 percent to 14 percent of their lifetime Social Security benefits while high-income men (making $80,000 annually) will see a 16 percent to 18 percent benefit boost due to this growing gap.

Life Expectancy Impacts SSA Benefits

The GAO study, released on April 4, 2016, found that raising the Social Security retirement age would result in even fewer benefits for lower-income groups. Lower-income men are living between 4 and 13 fewer years than higher-income men, and lower-income women are living between 2 and 14 fewer years than higher-income women.

“Poverty should not be a death sentence,” said Sanders, who serves as ranking member on the Primary Health and Retirement Security Subcommittee. “When over half of older workers have no retirement savings, we need to expand, not cut, Social Security so that every American can retire with the benefits they’ve earned and the dignity they deserve,” he says.

According to 64 page GAO report, the wealthiest Americans are not only living longer and collecting more in Social Security benefits, they are also contributing less of their income toward Social Security. Almost all of the income gains over the past three decades have gone to those earning above the $118,500 earnings cap and have therefore been exempt from Social Security taxes, costing the Social Security Trust Fund over $1.1 trillion, says the report.

“Today, the wealthiest Americans contribute less to Social Security than at any other time in recent history. We must reject calls to raise the retirement age and instead strengthen Social Security by ensuring millionaires and billionaires pay their fair share,” Sanders said.

Max Richtman, President and CEO of the National Committee to Preserve Social Security and Medicare (NCPSSM), says that the GAO report is especially important when you consider the push in Congress to raise Social Security’s retirement age to reduce benefits. “Forcing average Americans to delay retirement until 70, as suggested by some in Washington, would mean even smaller benefits for lower-income groups,” he says.

Richtman notes that NCPSSM has long opposed increasing the Social Security retirement age, stating that it is “nothing but a cruel cut in benefits” The GAO report shows exactly how cruel it would be, he says.

Instead of cutting Social Security, Richtman calls on Congress to boost benefits so that retirement income program can continue to fulfill its promise providing an adequate base of income for America’s seniors.

Lawmakers Push to Protect Social Security

Sanders, a presidential Democratic candidate, has introduced legislation that would ensure that Social Security would be able to pay every benefit owed to every eligible American for the next 58 years. His plan would increase benefits by more than $1,300 a year for seniors with less than $16,000 in annual income. This includes boosting yearly cost-of-living adjustments by making the consumer price index better reflect seniors’ rising costs for health care and prescription medicine.

To shore up the retirement program’s trust fund, the Senator would lift the cap on taxable income so everyone who makes more than $250,000 a year would pay the same percentage of their income into Social Security as middle-class working families.

“This report reinforces the importance of strengthening Social Security and preserving the guarantee of Medicare, especially for working and middle class Rhode Islanders,” said Congressman Cicilline (D-RI), who is a co-sponsor of the Protecting and Preserving Social Security Act. “After a lifetime of hard work, Rhode Islanders should be able to retire with economic security and peace of mind, he says, pledging to continue his efforts to support “commonsense” legislation that strengthen Social Security benefits.

The GAO study is a warning that proposals to raise the retirement age “would fall hardest on those who can least afford it,” says Senator Sheldon Whitehouse (D-RI). As a founding member of the Defending Social Security Caucus, Whitehouse plans to explore ways to strengthen the Social Security, “the bedrock of American retirement security.”

GAO made no recommendations in this report. However, in comments the Social Security Administration (SSA) agreed with GAO’s finding that it is important to understand how the life expectancy in different income groups may affect retirement income. The federal agency sees financial literacy as a key factor in preparing for a “secured retirement.”

According to a SSA official, “Social Security offers one of the best tools for the public to plan for their retirement and educate themselves about their benefits – a my Social Security account which is a secure, personalized online account that can be created at http://www.socialsecurity.gov/myaccount. With a my Social Security account, people can check their Social Security Statement to learn about future Social Security benefits, verify annual earnings, and plan for their financial future. More than 23 million people have already created secure, convenient accounts,” he says.

In recent years Congress has looked for ways to keep the Social Security program afloat by adjusting Social Security tax contributions, increasing retirement age, and reducing benefit amounts. Now with the release of the new report findings, the message is clear. Congress must not tinker with Social Security until it understands the unanticipated impact on those receiving the benefit checks, especially on the lower-income retirees.

For more information, contact Charles Jeszeck at (202) 512-7215 or jeszeckc@gao.gov.

Social Security Gets Attention at Debate

GOP Candidates Share Their Plans for Shoring Up System’s Solvency

Published in Woonsocket Call on March 12, 2016

Last Thursday, the four surviving G0P contenders for president at the CNN Republican debate at the Bank United Center on the campus of the University of Miami, focused on meaty policy issues and not theatrics. Previous debates were heated and sparks flew between candidates. But many political wonks consider this one to be subdued, may be even a little boring. Like the other 11 debates, on March 10 Ohio Governor John Kasich, Senator Ted Cruz of Texas, Businessman Donald Trump and Senator Marco Rubio of Florida, gave their two cents on scores of policy issues including, the right to bear arms, trade, jobs, illegal immigrants, education, national security, fighting ISIS, Iran’s nuclear deal and protecting Israel. But one political hot potato issue, Social Security, even got a little more air time during this debate.

With Florida having the highest percentage of retirees in the country, with nearly 3.1 million residents receiving a Social Security check, CNN Chief Political Correspondent Dana Bash, brought Social Security into the debate by asking the candidates how they would keep the nation’s retirement program afloat for future generations.

Bash called on Rubio to explain his position on rising the retirement age and reducing benefits for wealthy retirees. The Florida Senator said he would not cut Social Security checks, joking that “I’m against any changes to Social Security that are bad for my mother, a Social Security recipient.”

Younger Generations Take Brunt of GOP Fix for Social Security

Rubio warned that Social Security will ultimately go bankrupt taking the country down with it. So, here’s his fix. “So what it will require is people younger, like myself, people that are 30 years away from retirement, to accept that our Social Security is going to work differently than it did for my parents,” he noted.

The 44- year-old Florida Senator, called for increasing the retirement age of younger persons to age 68 ultimately to age 70, suggesting that Social Security checks should not “grow as fast as someone who made less money.”

“Medicare could very well become the option of using my Medicare benefit to buy a private plan that I like better. Medicare Advantage does that now,” said Rubio.
Explaining what he favors making changes to Social Security, Rubio noted that “in less than five years, only 17 percent of our budget will remain discretionary; 83 percent of the federal budget in less than five years will all be spent on Medicare, Medicaid, the interest on the debt.”

CNN moderator Bash called on Trump to explain why he did not want to raise the Social Security retirement age and his rationale for not wanting to cut benefits to wealthy retirees.

Trump responded by saying that his democratic opponents oppose cutting the retirement program, evening wanting to give recipients “even more.” The businessman, becoming more of a politician, clearly sees how the heated political issue, of making changes to Social Security, will bring votes to the Democrats. ”And that’s what we’re up against. And whether we like it or not, that is what we’re up against,” he says.

“I will do everything within my power not to touch Social Security [either making benefit cuts or rising the eligibility age”. Trump believes the solution is “to make this country rich again; to bring back our jobs; to get rid of deficits; to get rid of waste, fraud and abuse, which is rampant in this country.” He notes that catching improper retirement payments will also increase the solvency of the program.

Time Can Allow a Fix for Social Security Program

In response to those warning about the impending bankruptcy of the Social Security program if changes are not made, Trump says he would have a “a long-time to go,” possibly over 20 years, to increase the solvency of the program. It seems that he does believes that time will be on his side to fix Social Security, if he becomes president.

“The numbers don’t add up,” charges Rubio, to Trump’s assertion that reducing fraud and waste and in Social Security, the nation’s foreign aid programs and better purchasing policies. He chides both the Democrats and GOP for taking too long to “deal with” the solvency of Social Security.

With the spotlight on Cruz, the Texas Senator explained his advocacy for allowing younger workers to put some of their Social Security taxes into a 401 (k) accounts even with the

As president, Cruz pledges that he will not make any changes to Social Security that will impact anyone at or near retirement. “Every benefit will be protected to the letter,” he says, “But for younger workers, we need to change the rate of growth of benefits so it matches inflation instead of exceeding inflation.”

Finally, CNN moderator Bash, reminded Kasich of his position of cutting retirement payments. The Ohio Governor told a New Hampshire voter: “Get over cuts to Social Security benefits,” he says.

Kasich brought up his 1999 plan to save Social Security by allowing young people to have private retirement accounts. During a light hearted moment, Kasich quipped this memorable quote: “Now there are more 18-year-olds who believe they have a better chance of seeing a UFO than a Social Security check and we have a lot of seniors who are very nervous.”

Kasich’s plan to save Social Security is quite simple. “If you’ve had wealth throughout your lifetime, when the time comes to be on Social Security, you’ll still get it. It will just simply be less. And for those people who depend on that Social Security, they’ll get their full benefit. That’s the way it will work. And we don’t have to monkey around with the retirement age. And how do I know that? I’ve done all this before,” he told millions watching the two hour debate.

The writing is on the wall. 2016 GOP candidates for president, except Trump, look to make changes to Social Security to ratchet up the program’s solvency. Those calling for change say they won’t increase program eligibility, cut benefits or privatize the program, to impact aging baby boomers nearing retirement or for current Social Security recipients.

While differing on their political strategies, Democratic presidential contenders — former Secretary of State and New York Senator Hillary Clinton and Senator Bernie Sanders, — seek to strengthen and expand Social Security.

Generation’s X, Y and Z might will consider looking closely at Democratic and Republican presidential candidate positions on fixing Social Security. November’s winner might just tinker with your future retirement program or slash benefits, ultimately impacting how you will financially survive in your retirement years.