Gold-Plated Retirement?

Gold-Plated Retirement?

In “The elderly are better off than advertised” Washington Post columnist Robert J. Samuelson attacks what he calls “selective and self-serving statistics” that have been cited by defenders of Social Security and Medicare. According to Samuelson, such statistics are used to oppose cuts in these vital programs and support an “outdated and propagandistic notion that old age automatically impoverishes people.” 

Samuelson’s claims that older Americans are doing fine puzzled me. As Referral Coordinator at the Pension Rights Center I hear from a lot of older people who are having a very hard time making ends meet. I had to wonder, what’s the real story here?

Samuelson bases his claim on a recent government report that finds that “Most older people are enjoying greater prosperity than any previous generation.” I would agree with this premise – thanks to Social Security and Medicare, the social safety net has helped lift millions of older Americans out of poverty (which is now $10,289 a year for individual seniors). However, Samuelson seems to be extrapolating that because seniors are better off relative to prior generations, they must be living gold-plated lifestyles with antique car collections.

I decided to do some checking. It turns out that the report Samuelson cites, Older Americans 2010, shows that, according to a recent Census Bureau survey, half of all older households received less than $29,000 in income in 2009. Although not quoted in the report, the same Census Bureau survey shows that the median income for individuals age 65 and older who do not have earnings from a job is only $16,415 – about $100 a month more than the nation’s lowest-paid minimum-wage workers get flipping burgers. These are not amounts that buy you caviar and first-class tickets to Tuscany for the summer.

Of course, income isn’t the only measure of well-being. What about assets?

Samuelson’s column points to a statement in the Older Americans 2010 report that in 2007, the median net worth of 65-plus households was $237,000. But let’s remember that the vast majority of seniors own – and live in – their homes (85 percent, according to the Survey of Consumer Finances). The median home equity value for households 65 to 69 in 2007 was $200,000, and this is typically an asset that many do not wish to cash in and, moreover, cannot tap given today’s real estate market.

Let’s play around with the numbers: When you subtract home equity ($200,000) from overall net worth ($237,000), the median net worth for our nation’s elders is just $37,000. This is hardly an extravagant sum of money when you consider the fact that, according to Census data, older Americans will be drawing down their assets over 18.5 years.  

Another issue that the column fails to address is racial disparity when it comes to the finances of older Americans. According to a recent study by Demos and the Institute on Assets and Social Policy, “nine out of 10 senior households of color do not have sufficient economic security to sustain themselves through their projected lives.”

Certainly, the standard of living of today’s older adults may be better than it was for older adults in 1959 – as it should be. But this doesn’t mean that programs like Social Security and Medicare are financing “extra cable channels” for older Americans, as Samuelson argues.  While some older Americans are doing well, far too many are barely scraping by. 

If the picture for today’s retirees is not all roses, the prospects for future retirees – those who are the principal targets of proposed cutbacks in Social Security and Medicare – are even worse. According to the Center for Retirement Research’s National Retirement Risk Index, half of all working households in the United States are at risk of not having enough money to maintain their living standards in retirement.  

A look at the numbers made me realize that before we talk about cutbacks in some of our nation’s most critical programs, it’s important to remember that things are more complicated than the rosy picture Samuelson paints in his column. If we reduce future Social Security or Medicare payments, it will hurt the most vulnerable seniors in our society and many future retirees will have trouble living independently in retirement. Perhaps the minority of the truly affluent elderly will be able to afford the cuts – just cancel that trip to Italy, and they’ll be back in the black. But not everyone is so fortunate.

To see other statistics on older Americans, check out our statistics on the Income of Today’s Older Adults.