Retirees could face poverty not seen since Great Depression

Bloomberg

A few weeks after the Republican-controlled U.S. House of Representatives moved to kill rules allowing states to create portable retirement savings accounts, a new survey found that 75 percent of Americans support just such an option.

The response was a common refrain in a report that echoed the growing dread of living out one’s golden years in poverty. Politicians in Washington just don’t get how hard it is to prepare for retirement, according to 85 percent of those polled by Greenwald & Associates for the National Institute on Retirement Security.

That kind of unity was related in large part to a grim view of the future faced by the elderly. “If current trends continue, the U.S. soon will face rates of poverty among senior citizens not seen since the Great Depression,” the report says. “Of the 18 million workers between the ages of 55 and 64 in 2012, more than four million will be poor or near poor at age 65. This includes 2.6 million Americans considered middle-class prior to retirement.”

The survey, part of a larger research project looking at U.S. views on retirement security, randomly polled 800 people age 25 or older by phone since the 2016 election. The report concluded that “Americans are united in their anxiety about their economic security in retirement and in their dissatisfaction with national policy makers’ inaction to address the nations retirement crisis.”

Despite the political divide that has frozen the nation in place on other issues, support for such state-sponsored savings plans was close to bipartisan. Some 83 percent of Democrats were in favor of the option for those without work-sponsored plans, compared with 72 percent of Republicans.

Party lines were even less important when it came to how respondents viewed their own prospects. Almost 76 percent of those polled worry that economic conditions might hurt their chances for a secure retirement. Meanwhile, nostalgia for the days of guaranteed income streams from defined benefit pension plans runs deep. Seventy-one percent of Americans said pensions beat 401(k)s in helping them live comfortably in retirement.

The survey also looked at attitudes about Social Security amid talk of benefit cuts. “For most, it is the only source of lifetime income adjusted for inflation,” the report stated. Any cuts to government spending that would lead to lower Social Security benefits for current retirees got a thumbs down from 76 percent of those surveyed. That’s up from 67 percent in 2013.

When asked if the government should cut spending in all areas, even if it means reducing Social Security benefits for current retirees, only 24 percent of Americans agreed. What about cutting benefits for future retirees? This is where party lines became more defined: Some 13 percent of Democrats said yes, compared with 36 percent of Republicans.

More findings from the survey:

• Fifty-five percent of people surveyed “strongly agreed” that the country faces a retirement crisis.
• Eighty percent of those surveyed said the average worker “cannot save enough on their own to guarantee a secure retirement.” That’s up from 73 percent in 2015. More self-identified Democrats agreed with that statement (85 percent) than Republicans (77 percent).
• The high cost of long-term care is a major factor behind how tough it is to prepare for retirement, according to 88 percent of survey respondents. Democrats and Republicans were very close on this measure, at 89 and 91 percent, respectively.
• Eighty-two percent of Americans said that the government should make offering pensions easier for employers.
• Making sure that Americans have a secure retirement should be a higher priority for Washington, according to 88 percent of those surveyed. Among Democrats, 98 percent agreed. Among Republicans, 82 percent agreed.
• “Almost 22 percent of people age 65 and older live in families that depend on Social Security benefits for 90 percent or more of their income,” according to the report. “Another 24 percent receive at least half, but less than 90 percent, of their family income from Social Security.”