New reports out today from AARP and its Public Policy Institute underscore how the tough economy has taken a toll on the middle class, including those over age 50.
The group says today’s workers are much less likely to enjoy a secure retirement, let alone the kind of retirement that their parents or grandparents enjoyed. They say these workers have seen their incomes fall, their savings shrink, and have gone deeper in debt.
What’s more, according to AARP, health care costs are rising faster than wages. One study, done in conjunction with the Urban Institute predicts that the average retirement income will fall from the current 80 percent of average earnings, to 73 percent of earnings. When health care costs are figured in, it’s even worse. The study says that retirees will have to live on a budget that is just over half of what they made when they were working.
The study also predicted that middle-income retirees will rely on social security for about half of their retirement income. For low-income earners, social security will make of 69 percent of their retirement money. The average social security payment today is just over $13,000 a year.
AARP, one of the nation’s most powerful lobbying groups, also laid out its strategy for the upcoming budget debate. The group’s CEO Barry Rand said Social Security is not in an immediate solvency crisis, and has not contributed to the deficit. Because of that, Rand said, Social Security and Medicare must come out of the budget deal and be discussed separately.
“We need a full-blown national discussion of how to ensure that Social Security continues to contribute to the retirement security of older Americans in the future — not in the context of reducing a federal deficit it did not create, but with the goal of helping people achieve retirement security,” Rand said.
What’s important is not just shoring up Social Security for future generations, but also ensuring that it continues to provide and adequate safety net, Rand said .
“Social Security remains the critical foundation of income security for the overwhelming majority of people. And because of low savings rates and high health care costs, future retirees will rely on it even more,” he said.
The group plans to put a face on what’s at stake.
“It’s all about people and not just numbers,” Rand said. “We feel the recent debate in Washington has forgotten that.”
The organization is clearly ready to use its muscle. AAPR says its members are not opposed to “reasonable” changes in Social Security, but that the future of Social Security and Medicare cannot be part of the last minute brinksmanship of a budget deal.
“We cannot make budget choices without considering the consequences of those choices on people,” Rand said. “Solving the budget deficit by cutting Social Security and Medicare benefits will leave too many people with nothing left at the end of the month.”