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Perspective on the Social Security Hearings
Bernard Wasow, The Century Foundation
April 26, 2005
As this week's Senate Finance Committee hearings over Social Security's future unfold, it will be important to keep in perspective how precarious living conditions are for the elderly. AARP just released its second annual report The State of 50+ America 2005, which includes updated numbers showing why our basic social insurance programs for the elderly, Social Security and Medicare, are so essential:
. Incomes of retirees are very low. More than half of households between the ages of 65 and 75 are living on less than $30,000 a year, and more than half of households over 75 are living on less than $20,000.
. Social Security is essential for the majority of retirees. It provides more than half the income of nearly 40 percent of households aged 65 to 75. Among households over 75 years old, 60 percent get the majority of their income from Social Security.
. Financial assets (mostly savings and mutual fund balances) of those over 65, in spite of being significantly higher than they were 10 years ago, remain very low. Nearly half of all households aged 65 to 75 have less than $50,000 in financial assets, and for those aged over 75, more than half have less than $40,000.
One set of numbers has changed fairly significantly over the past decade. More and more older Americans are holding down jobs to maintain their income. A decade ago, 62 percent of those aged 50 to 65 were working and 16 percent of those between 65 and 75 still held jobs. Last year, those numbers had risen to 67 percent and 22 percent, respectively. Older Americans appear to have reversed the trend toward earlier retirement and now are working more than in the past. In spite of this, their incomes remain low. This increase in senior citizen participation in the labor force is far greater than the very small improvement in average health they report. It looks like seniors need to work more than they did a decade ago to make ends meet.
The new AARP report is reassuring in one sense. Most seniors are living very modestly but in dignity and independence. But it underlines once again that, for the majority of older Americans, Social Security and Medicare are not side-dishes on their retirement menus. These are the programs that keep food on their tables and a roof over their heads. The minority who will not depend on Social Security's guarantees in their old age may view reductions in guarantees combined with increased risks as interesting experiments. Most older Americans, and other Americans too, are in no position to be the guinea pigs in those experiments.
Bernard Wasow is a senior fellow at The Century Foundation.
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