The graying of America is a statistical certainty as the large post-war generation begins to reach retirement age. According to recent studies detailed by the Washington Post, 53% of new retirees will be unable to sustain a standard of living comparable to their parents or grandparents.
"For the first time since the New Deal, a majority of Americans are headed toward a retirement in which they will be financially worse off than their parents, jeopardizing a long era of improved living standards for the nation’s elderly, according to a growing consensus of new research."
There are many reasons for the expected decline, but principal among them are the drastic effect of the Great Recession on personal wealth, the shift from traditional defined benefit pension plans to self-directed and funded IRA and 401(k) plans, increasing debt and insufficient savings, rising health care costs and the simple fact that longevity has increased for Baby Boomers, the most numerous demographic group.
There is little that individuals facing imminent retirement with too little set aside can do to make up in a few years for neglect in retirement planning and saving and the economic downturn in 2008, except to take full advantage of tax savings and to delay retirement. For many people in lower paying jobs or in physically demanding jobs this is not possible. The alternative of lifetime employment looms for some, poverty for others, with most facing diminished expectations in retirement.
Social Security, enacted in 1935, and Medicare, enacted in the 1960s, virtually ended the scandal of old-age poverty for the past and present generations of retirees, but these programs are under attack and may not be there in their present form for future retirees.
Viewed in this context the political battles in Washington over the national debt and the future of so-called "entitlement" programs represent more than a difference in ideology. The quality of life of future retirees will depend on how we resolve the challenges of defining what type of society we want to be and how best to provide for a secure retirement.
The role of government in providing a safety net for the needy should not be compromised for the sake of a free market philosophy that favors those who do not need assistance. Often couched in terms that pit one generation against the next, fixes that purport to "protect" or "reform" Social Security or Medicare by sacrificing the essence of these programs by privatising them or transforming them to voucher programs would hurt the very people they are designed to protect.
Although some reduction in benefits seems inevitable given the current climate in Washington and the Republican strangle-hold on the House of Representatives, the importance of government benefits, and particularly Social Security, Medicaid and Medicare, to the well-being of retirees will come into focus over the next few election cycles as more Americans are forced to confront the future with too-little saved for a comfortable retirement. When that happens expect office holders to have a new appreciation for making retirement the "golden years" our parents were told to expect.