7 Chilling Facts About Retirement in America That Should Make Obama Tremble Before Cutting Social Security and Medicare
Photo Credit: AFP
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We are headed for a catastrophic retirement train wreck. A Wall Street-driven financial crisis has stripped millions of people of things like jobs, pensions and home equity that were supposed to deliver a dignified retirement after a lifetime of hard work. The crisis has also provided certain interests the opportunity to make false claims about the “unaffordability” of vital social insurance programs like Social Security and Medicare that help the 99% make it. These opportunistic “ Raiders of Your Lost Retirement” do not give a hoot if you starve in your golden years – this is about money to them. American financiers hate Social Security, for example, because they want to push us toward private retirement accounts on which they can charge fees. A large swath of the wealthy does not like Social Security and Medicare because they do not like to pay taxes.
You might think Obama would be on the side of the citizens on this one. But it seems that the President will officially propose this week to cut Social Security and Medicare as part of his annual budget, despite the fact that this move would be economically irresponsible, socially disruptive and morally repugnant. Here are seven things that should make Obama tremble before he dares to announce such a betrayal of the American people.
1. Retiring on thin air: In a recent report by the Employee Benefits Research Institute (EBRI), we find that a whopping 57 percent of American workers have managed to put away less than $25,000 for retirement – less than the one year’s annual income for the median American adult. In 2008, that number was 49 percent, and the problem is getting worse every year. Half of American workers are either “not too confident” or “not at all confident” that they will be able to make ends meet in their retirement. In her must-read New York Times op-ed, economist Theresa Ghilarducci doesn’t mince words – or numbers. She estimates that close to half of middle-class workers will be poor or near poor in retirement and reduced to living on a food budget of about $5 a day. That won’t even buy a decent bag of cat food.
In the face of this bleak picture, the President appears to be poised to propose a cut to Social Security in the form of a “chained CPI” – a way of calculating annual cost of living increases that does not keep up with the actual costs senior have to pay. Economists including Dean Baker, co-director of the Center for Economic and Policy Research in Washington, have discredited chained CPI. Baker warns that it can cost retiring 65-year-olds the sum of $650 per year, and that number can leap to twice that amount once seniors reach 85.
2. Pension perils: American workers like pensions better than higher incomes, more vacation time and bigger bonuses. And it’s no wonder: retirees with pensions have far more income security than their pension-less counterparts. In 2011, one out of three older adults enjoyed some form of pension, but that number has been shrinking for decades. Since 1985, 84,350 pension plans have vanished. Corporate pensions have gone the way of the dodo bird and the precious few private pensions that remain are in jeopardy. Public pensions are the targets of cynical austerity hawks who use the excuse of state and municipal budget crises that have little to do with pensions (and much to do with Wall Street) to make war on workers’ retirements.
This puts an added strain on retirees, and we don’t yet know how catastrophic it’s going to be because many affected by the pension killing-spree will not retire for many years. But we surely know this: pensions have been a vital part of retirement that have kept retirees afloat, and without them, more will sink into poverty.