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Economic Insecurity and Inequity for Older Americans

Stria Staff April 29, 2019

As the landscape of personal finances continues to change, many older adults are facing economic inequity and insecurity.

For decades, Americans relied on a combination of social security and employer pensions to cover costs in their older years. That has changed significantly and Boomers are the first generation to rely on their own savings—sometimes in the form of 401ks and IRAs—to cover costs after retirement. At the same time, emergency saving continue to dwindle and inequity is expanding.

The result is more older Americans facing economic insecurity—which has a significant impact not only on their lives and families, but also on our public policies, senior services programs, and businesses in the longevity market. We curated several articles to help you explore further.

Highlights & Insights: Curated excerpts from though-provoking articles

Economic Inequality in Later Life
ASA Blog | Karen D. Lincoln

The extreme disparity in income and wealth distribution has a real and distinct impact on older adults. According to the latest data, more than 7 million older adults are living below the Federal Poverty Line, per the Supplemental Pov­erty Measure (Cubanski et al., 2018). This number will increase to 72 million by 2030. A 2016 study by the Kaiser Family Foundation found that half of all Medicare beneficiaries have incomes below $26,200 per year; while 25 percent have incomes below $15,250. Only 5 percent have incomes above $103,450 (Jacobson et al., 2017). 

Studies also show that economic insecurity is particularly concentrated among older women of color. In 2013, African American single women between ages 65 and 84 had a median wealth of $55,700, compared to $187,000 for non-Hispanic white single women in the same age category (Sullivan and Meschede, 2016). 

Half of Older Americans Have Nothing in Retirement Savings
Bloomberg | Ben Steverman

The bad news is that almost half of Americans approaching retirement have nothing saved in a 401(k) or other individual account. The good news is that the new estimate, from the U.S. Government Accountability Office, is slightly better than a few years earlier.

Of those 55 and older, 48 percent had nothing put away in a 401(k)-style defined contribution plan or an individual retirement account, according to a GAO estimate for 2016 that was released Tuesday. That’s an improvement from the 52 percent without retirement money in 2013.

Two in five of such households did have access to a traditional pension, also known as a defined benefit plan. However, 29 percent of older Americans had neither a pension nor any assets in a 401(k) or IRA account.

The estimate from the GAO, the investigative arm of Congress, is a brief update to a more comprehensive 2015 report on retirement savings in the U.S. Both are based on the Federal Reserve’s Survey of Consumer Finances.

Adult Kids Are Robbing Parents of Retirement
USA Today | Sonja Haller

At least 50% of parents say they’ve cut into their retirement savings to help their adult children financially, according to a bankrate.com study.

Seventeen percent said by “a lot” and 34% of parents said they sacrificed their financial future “somewhat.”…

As some Americans reach retirement age and realize they don’t have enough saved, it’s keeping them in the workforce longer. Workers older than 55 filled almost half of all new jobs in 2018 even though they make up less than a quarter of the nation’s labor force, according to an analysis of Labor Department data by The Liscio Report.

That could mean that mom and dad are holding jobs that would otherwise be held by young people, Hamrick told CBS News. 

‘Too Little Too Late’: Bankruptcy Booms Among Older Americans
The New York Times | Tara Siegel Bernard

For a rapidly growing share of older Americans, traditional ideas about life in retirement are being upended by a dismal reality: bankruptcy.

The signs of potential trouble—vanishing pensions, soaring medical expenses, inadequate savings—have been building for years. Now, new research sheds light on the scope of the problem: The rate of people 65 and older filing for bankruptcy is three times what it was in 1991, the study found, and the same group accounts for a far greater share of all filers.

Driving the surge, the study suggests, is a three-decade shift of financial risk from government and employers to individuals, who are bearing an ever-greater responsibility for their own financial well-being as the social safety net shrinks.

Looking for an even deeper dive into these issues as they relate to inequity? The Summer 2018 issue of ASA’s Generations is a great resource: “Land of the Unequal? Economic, Social Inequality in an Aging America.”

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