Saturday, March 03, 2018

Atlantic Monthly article on a likely trend that the older will get poorer in the US

 
 
More and more older people are finding themselves in a similar situation as Baby Boomers reach retirement age without enough savings and as housing costs and medical expenses rise; for instance, a woman in her 80s is paying on average $8,400 in out-of-pocket medical expenses each year, even if she’s covered by Medicare. Many people reaching retirement age don’t have the pensions that lots of workers in previous generations did, and often have not put enough money into their 401(k)s to live off of; the median savings in a 401(k) plan for people between the ages of 55 and 64 is currently just $15,000, according to the National Institute on Retirement Security, a nonprofit. Other workers did not have access to a retirement plan through their employer.
 
That means that as people reach their mid-60s, they either have to dramatically curtail their spending or keep working to survive. “This will be the first time that we have a lot of people who find themselves downwardly mobile as they grow older,” Diane Oakley, the executive director of the National Institute on Retirement Security, told me. “They’re going to go from being near poor to poor.”
 
The problem is growing as more Baby Boomers reach retirement age—between 8,000 to 10,000 Americans turn 65 every day, according to Kevin Prindiville, the executive director of Justice in Aging, a nonprofit that addresses senior poverty. Older Americans were the only demographic for whom poverty rates increased in a statistically significant way between 2015 and 2016, according to Census Bureau data. While poverty fell among people 18 and under and people 18 to 64 between 2015 and 2016, it rose to 14.5 percent for people over 65, according to the Census Bureau’s Supplemental Poverty Measure, which is considered a more accurate measure of poverty because it takes into account health-care costs and other big expenses. “In the early decades of our work, we were serving communities that had been poor when they were younger,” Prindiville told me. “Increasingly, we’re seeing folks who are becoming poor for the first time in old age.”
 
This presents a worrying preview of what could befall millions of workers who will retire in the coming decades. If today’s seniors are struggling with retirement savings, what will become of the people of working age today, many of whom hold unsteady jobs and have patchwork incomes that leave little room for retirement savings? The current wave of senior poverty could just be the beginning. Two-thirds of Americans don’t contribute any money to a 401(k) or other retirement account, according to Census Bureau researchers. And this could have larger implications for the economy. If today’s middle-class households curtail their spending when they retire, the whole economy could suffer.
 
The retirement-savings system in the United States has three pillars: Social Security, employer-sponsored pensions or retirement-savings plans, and individual savings. But with the rise of less stable jobs and the decline of pensions, a larger share of older Americans are relying only on Social Security, without either of the two other pillars to contribute to their finances. This by definition means they have less money than they did when they were working: Social Security replaces only about 40 percent of an average wage earner’s income when they retire, while financial advisors say that retirees need at least 70 percent of their pre-retirement earnings to live comfortably.
 
Today’s seniors are so reliant on Social Security in part because companies that once provided pensions began, in the 1970s, to turn the responsibility of retirement saving over to individuals. Rather than “defined benefit” plans, in which people are guaranteed a certain amount of money every year in retirement, they receive “defined contribution” plans, which means the employer sets aside a certain amount of money per year. This switch saved companies money because it asked employees, not employers, to take on the risks associated with long-term investing. This means that the amount people receive is more affected by the ups and downs of the stock market, their individual wages, and interest rates. In 1979, 28 percent of private-sector workers had participated in defined-benefit retirement plans—by 2014, just 2 percent did, according to the Employee Benefit Research Institute, a nonprofit. By contrast, 7 percent of private-sector workers participated in defined-contribution plans in 1979—by 2014, 34 percent did.  
 
It's a stark way to put things, if today's seniors are doing worse and worse what may be in store for today's thirtysomethings in the gig economy?  I don't really miss the 1990s as a job market, where it was rambling from one temp gig to another and while it was probably technically true to say the economy had bounced back a bit I don't regard the overall legacy of Clinton as necessarily one that we can or should replicate in either foreign or domestic policy.  As a callow youth I was in favor of NAFTA but I also didn't think we'd turn around and start bombing the former Yugoslavia (or that we should have).  That groups who were trained to battle the Soviet influence and aggression would eventually turn out to regard us as the more significant adversary was ... well ... not hugely surprising in some ways.  It was shocking on 9/11/01 but if you have spent any time considering our foreign policy approach in Cold War terms there were a couple of fronts on which our strategy for success in one context could be seen as easily boomeranging on us once those contexts passed. 
 
Almost two decades ago even people at Slate were writing about how paying of the national debt was probably not that important and not that big a deal.
 
But then the two parties have been just fine with the national debt and trade deficits so long as it was only the worry or fault of the other party during an election cycle.  The idea that whatever al Qaeda became it was aided along the way by a bipartisan investment doesn't come up for ideologues who want to blame everything on the red or blue.
 
I've never been a fan of Randroids and have found it ultimately impossible to admire the approach of people like Rand.  Even if a person reads Burke it's possible to argue from his argument against the abolition of stabilizing institutions and norms that what we should not try to do at this point is try to privatize or abolish the social safety net upon which more and more elderly and disabled people are reliant.  But then when I look at what putatively progressive and conservative Americans claim these days I'm not sure any of them have actually read Burke so much as they've read whatever talking points radicals and reactionaries have to say about Burke. 
 
I'm not convinced that as these things seem to go the mainstream Democratic party or the Republican party cares that much about thirty to forty years from now when today's twentysomethings may be approaching retirement age.  When Social Security was developed the average life expectancy wasn't as long as it is now.  A person might die within a few years of being eligible for programs upon which a person might now be reliant for ten or twenty years or more. 
 
Our deficit won't go away and that raises some questions I'm not sure are addressed at a mainstream level regarding the long-term viability of a variety of programs.  If our creditors call in their debts (whether or not the national debt is collectible is another topic) what happens to the systems that would depend on the fiscal competency of the United States?  I linked earlier to an article that mused upon two different ways the United States could, in theory, default on its debt.  The assumption was that that's so far in the future as to be abstract.
 
Which might be at least a small part of how we got here. History is full of the things that nobody believed was going to happen because the results would be too inconvenient for them to plan as if that were ever going to be the case actually transpiring.
 
I saw a piece at The New Republic with a headline asking if it were possible to revive the glory days of the Johnson years on account of the Great Society programs.  LBJ's legacy is inseparable from that but also from Vietnam.  I just don't think we want to go back to those years when people had reason to worry we'd get sucked into a nuclear conflict.  That risk didn't go away even after the Cold War ended, obviously. 
 
I've never been a particularly optimistic person and now doesn't seem like a time to be optimistic.  It's not that the world's going to end.  I think Jameson's axiom that it's easier to imagine the end of the world than the end of capitalism is a misreading of our world, though a forgivable one, because if Hollywood is showing us its true colors in the mainstream film it makes then it's far, far easier for Americans to imagine the end of the world than a world that isn't saved by an existing America.  Arrival did not have its linguist be someone from China, for instance. But then Arrival was not ultimately about its science fiction set up or formal plot, it was about art itself and the nature of language to mold and shape how we conceive of the reality we live in, and it was also about a tension between those people who believe in fate and accept it and those who reject it.  So in that sense Arrival, though formally a science fiction story,
 
There's not going to be a science fiction movie in which the linguist is from China or Mongolia or is even Native American, for that matter.  That's not how studios think.
 
But I digress.
 
A century ago World War I wrapped up and the story we've had told about it since is that the Germans were the bad guys.  Why?  Well ... we could be cynical and say that the Germans were the bad guys because instead of doing what all the other white European colonial empires were doing in invading regions populated by non-white people the Germans had the bad manners to take military action against fellow whites.  That's cynical, yes, but I admit to being cynical about the ways in which white radicals and reactionaries have increasingly spent the last forty years scapegoating each other for a legacy that is altogether shared.  Is Trump a racist?  So what?  Wasn't Woodrow Wilson a racist?  Wilson, of course, did not have command over the surveillance state that we have and who paved he way for that surveillance state?  Look over the last century, it will look pretty bipartisan overall.
 
If the systems we have in place are in any danger of becoming insolvent as they are neither of the big two parties is going to attempt to d more than find ways to scapegoat each other respectively for a common legacy. 
 
And at a larger level, I wonder these days whether or not the United States is a society that has put so much of its life on credit that when the bill comes do it will be beyond what we can collectively ever pay. 
 
That the elderly, disabled and those too young to be able to gainfully be employed in the systems in place will be harmed seems to be moot, there's not really a need to doubt that as such. 
 
 

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