Yes, there is a retirement crisis
On Tuesday, the Social Security subcommittee of the House Ways and Means Committee held a hearing on “what workers need to know about Social Security”. Given the release of the Social Security Administration’s annual Trustees Report only a day earlier, this hearing was yet another conservative attempt to undermine the program and shape the discussion over the size and nature of the retirement crisis – the growing shortfall in Americans’ retirement savings. Launched by Chairman Sam Johnson (R-TX), the hearing announcement made reference to retirement income being underreported, implying that families are better off than the data show. Moreover, the witness list included crisis deniers, such as the American Enterprise Institute’s Andrew Biggs, making claims that the number of households inadequately prepared for retirement is largely overstated. Some testimony turned to calls for Social Security benefit cuts. Because, after all, cutting Social Security would theoretically inflict little harm if families are already well prepared for retirement. In reality, families would suffer tremendously from Social Security cuts. Why? Because as a long-standing body of economic research has repeatedly shown, there is indeed a growing crisis.
The Center for Retirement Research estimates with its well-respected National Retirement Risk Index that 53 percent of working age households in 2010, the last year for which data are available, could not expect to maintain their standard of living in retirement. This share of households falling short in their retirement savings has gradually risen from 31 percent in 1983 to 38 percent in 2001 and now to about half of the entire working age population. The risk of having insufficient savings is especially large among communities of color, single women, and households with little education, New York University Professor Edward Wolff has shown in a number of studies.
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This article was originally published in The Hill.
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