Money Culture
September 6, 2012
Campaign Discourse Misses Major Issue
Retirement-income security is receiving little attention as the presidential campaign heats up, despite a mound of evidence that Americans’ retirement prospects are stagnating – or worse.
While Medicare has been at the center of the debate, there has been little emphasis on the broader topic of income security for what remains the largest demographic bulge in U.S. history – the baby boomer generation – and now the largest block of retirees.
In the retirement community, however, debate swirls constantly about how bad the situation really is. These debates are slicing the onion awfully thin when one research paper or report after another contains a new aspect of the troubling fallout from the final years of a transition from secure, employer-guaranteed pensions to DIY retirement. Sometimes it seems that Wall Street’s collapse in 2008 was just the kickoff for the bad news on the retirement front.
A new report from Boston College’s Center for Retirement Research, which funds this blog, finds that just 42 percent of workers in the private sector had pension coverage in their current jobs in 2010 – that’s coverage of any kind, including the defined-contribution plans that now dominate. Yikes!
The Center noted that these data cover company workers of virtually all ages, and many of them will eventually move into jobs that offer pension plans. Nearly two in three employees end up with coverage at some point either on their own or through a spouse. But during the time that they lack coverage, they may not be saving. This patchwork system adds to our nation’s future pension problems.
Here are some other sobering findings:
- According to the Employee Benefits Research Institute, 52 percent of Americans are confident they’ll have enough money to live comfortably in retirement – that’s down from 70 percent a decade ago.
- Half of the elderly living alone and one-third of couples have less than $10,000, a figure that does not reveal how much suffering went into preserving even that small amount.
- 401k balances for baby boomers on the crest of retiring? Figures vary but they don’t amount to even a single year of wages for many – and they’re not going up either.
- The student loan crisis is tough on college graduates, but some parents are also robbing their 401ks to help them out.
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Regarding Medicare, it is disturbing the inaccurate claims made by both major party candidates and their campaigns. They prefer soundbites based on fear vs. straight talk on challenges and solutions. I think voters and seniors in particular can handle the truth.
For example, the Romney campaign says Pres. Obama stripped $712 Million from Medicare, but failed to add back the value of new preventive services for all beneficiaries, the shrinkage of the Part D “donut hole” and other enhancements under the Affordable Care Act.
The Obama campaign and other Democrats distort the truth saying Republicans want to “end Medicare as we know it.” The truth is the Ryan Plan has no affect on anyone age 55 or over today and seeks to preserve and extend Medicare.
Another odd claim by Democrats is that Romney-Ryan want to convert Medicare to a voucher program. This is odd because a voucher-type payment already exists with Medicare Advantage plans! In case no one was looking, about 25 percent of seniors are enrolled in these plans and like them. Medicare pays these plans for each senior who enrolls, largely, or sometimes totally, subsidizing the cost of these plans. Looks like a voucher to me.
And both sides demagogue when they claim each favors big cuts to Medicare when the truth is, they both agree to slow the growth of future spending. But only in Washington, DC is a slowing of future spending a “cut.”
Frankly, I think many of our “leaders” are just plain ignorant about Medicare and the things they themselves vote into existence. It matters not whether their distortions are willful or based on ignorance. In either event the American people suffer.
I agree with your article on August 25, 2011, “Why Baby Boomers Can’t Retire,” that it all comes down to denial.
When I try to suggest money-saving ideas to my husband, my children (adults) or my friends, they just laugh and tell me I shouldn’t be so cheap. It makes me sad that they don’t even want to think about the approaching inevitable. I will have the proverbial last laugh, but it won’t really be funny.
Jenna and Dave,
Thank you for the comments. I hope more readers will weigh on their views of these issues!
Kim