Posts Tagged ‘Social Security’
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In the current budget debate, the loudest calls for Social Security cuts are coming from two lobby groups—Fix the Debt and the Business Roundtable—that led by CEOs who will never have to worry about their own retirement security.
According to the Institute for Policy Studies [pdf], the retirement assets of Business Roundtable CEOs average $14.5 million—more than 1,200 times as much as the $12,000 median retirement savings of U.S. workers near retirement age. A retirement fund of $14.5 million, combined with Social Security, would generate a monthly retirement check for these CEOs of $88,576. That’s 68 times what a typical U.S. retiree can expect to receive.
Many of these same CEOs are calling for spending reductions on so-called entitlements (via, e.g., a shift to “chained CPI” and raising the Social Security retirement age), while at the same time accumulating enormous retirement funds for themselves and leading companies that have slashed retirement benefits for their own employees.
American workers face a “retirement income deficit” (i.e., the difference between the amount of money needed to maintain one’s lifestyle in retirement and the amount of money saved in retirement accounts) of $6.6 trillion, according to the Center for Retirement Research at Boston College. Six million American workers lived in poverty in 2010. This number is expected to grow by a third – to 8 million – by 2020. Without Social Security, 43.6 percent of all retired Americans would be living in poverty, according to the Center on Budget and Policy Priorities.
Among Americans approaching retirement (age 50-64), the bottom 75 percent by wealth had just $26,395 in retirement assets, on average. This is enough to generate a $156 monthly check to supplement their Social Security. The wealthiest 25 percent of this age cohort is slightly better off with $52,000 in retirement savings, enough for an expected $308 monthly check in their golden years.
As I say, only in America. . .
Tags: Bernie Sanders, chart, Elizabeth Warrn, pensions, retirement, Social Security
Bernie Sanders and Elizabeth Warren are pushing back against the idea that we need to impose cuts in Society Security benefits—instead calling for an expansion of the program.
As Ezra Klein explains,
For years, pension experts have spoken of the “three-legged stool” of retirement savings: Social Security, employer pensions and private savings. In recent years, however, that stool has begun to wobble, and today, Social Security is basically the only leg holding it up.
In 1980, about 40 percent of private-sector workers had a guaranteed pension. By 2006, that had fallen to 15 percent. Today, the 401(k) reigns supreme, with a trajectory that is almost the precise reverse of guaranteed pensions: In 1979, 17 percent of workers had a 401(k). Today, 42 percent do.
Those 401(k)s, however, are woefully underfunded. In 2010, 75 percent of workers nearing retirement had less than $30,000 in their 401(k). Sixty percent of low-income households are at risk of being unable to maintain their already modest living standards in retirement.
Individual savings don’t look much better. About a third of households don’t have a savings account at all. More than 40 percent don’t have enough to cover basic expenses if they lost their main source of income. In a vicious cycle, the need for savings is so great that many workers are tapping into their 401(k)s early: In 2010, contributions to defined-contribution pensions totaled $176 billion, while early withdrawals — which carry heavy penalties — totaled $60 billion.
Today, Social Security provides 37 percent of the income for all Americans over 65, and about 80 percent of the income for seniors in the bottom half of the income distribution. Given the state of private and employer pensions, those numbers will have to rise in the coming years, or else the standard of living for seniors will fall.