Washington, DC—Today, on the 85th anniversary of the Social Security Act, Congressman Don Beyer (D-VA), the Vice Chair of the U.S. Congress Joint Economic Committee (JEC), released two reports on the weakening of the American retirement system.
The first report, titled “Retirement Insecurity,” explores why retirement isn’t a reality for all Americans. (This report was released for the first time last year and is being re-released with a new preface and updated data where available.) The second report, titled “The Impact of the Coronavirus Recession on Older Workers,” explores the challenges older workers face—those aged 55-64 who are approaching retirement age, and those 65+—as a result of the economic recession and the coronavirus crisis that caused it.
Social Security is the foundation of the American retirement system. Nearly half of all Social Security beneficiaries over 65 get a majority of their retirement income from Social Security, and one fifth get over 90 percent of their income from it. These retirees rely heavily on Social Security—our nation’s retirement program—because employer-based retirement plans and personal savings have proven to be inadequate for them.
Other findings in the reports include:
- The American retirement system was traditionally thought of as a “three-legged stool”—private savings, employer-based pensions or retirement plans, and Social Security benefits. Now, only one leg of this stool—Social Security—provides guaranteed benefits. The other two have been worn down and weakened, largely because employers have shifted the burden of providing retirement security back onto workers themselves.
- The coronavirus crisis has made a bad situation worse—particularly for older workers. For these workers, staying in the workforce is dangerous because the coronavirus targets their age group and leaving the workforce is dangerous as well because the economic recession makes planning for retirement even more difficult.
- Women and people of color have a particularly tough time when it comes to retirement as a result of wage discrimination and other economic inequalities.
From Congressman Don Beyer, Vice Chair of the JEC:
“There are workers who say, ‘I’m going to retire next year,’ and then the next year comes and they say the same thing. In a lot of cases their health or the health of a loved one is failing, and they are putting off retirement because working one more year will increase their monthly Social Security benefits by fifty bucks—fifty bucks!
“That is not what an American retirement system that works for everyone looks like. We need to make sure all American workers—no matter their race, gender, occupation, salary and employer—can retire with dignity when it is time. That means strengthening Social Security, which is why I am proud to support legislation my colleague Congressman Larson has introduced that will do just that. That also means creating a public 401K option so all Americans who want a retirement plan can have one and the savings they accumulate follow them from employer to employer.”
From Congressman John B. Larson (D-CT), Way and Means Social Security Subcommittee Chairman and Co-Chair of the Expand Social Security Caucus:
“Social Security is the foundation of our nation’s retirement system. The COVID-19 pandemic has made it clear now more than ever that we need to act to expand and strengthen the program so that its benefits keep up with costs that seniors incur in retirement. Throughout its 85-year history, Social Security has never missed a payment. These are Americans’ earned benefits that seniors depend on for financial security. Women and people of color rely on these benefits even more, and Social Security helps to partially mitigate in retirement the inequalities they’ve experienced in the labor market. I’m proud to work with Vice Chair Beyer to strengthen our nation’s number one anti-poverty program, Social Security, and ensure that future generations of retirees can continue to count on its guaranteed benefits.”
From Teresa Ghilarducci, Irene and Bernard L. Schwartz Professor of Economics and Policy Analysis at The New School, and Director of The New School's Schwartz Center for Economic Policy Analysis and its Retirement Equity Lab:
“Around the country, older workers are facing dire choices. 'Greatly increase your chance of contracting a deadly virus by returning to work or spend the rest of your life in poverty.' 'Work forever or retire and run out of food and water.'
“This is not what aging with dignity looks like. Hard working Americans deserve, and are in fact owed, a secure retirement. Sadly our Retirement System is broken and works only for the few. On the 85th Anniversary of Social Security, it is time we commit to upholding the program's intended aim—to ensure a dignified retirement to workers of all races, genders, and income levels. To do this we must expand Social Security and provide all workers with a universal, non-predatory, guaranteed savings account.”
Only 40 percent of Americans have any savings at all in retirement accounts, and among these the typical account balance is $40,000—far short of the recommended savings target of six times current income at age 50. Women, Black and Hispanic Americans are worse off because of the economic inequalities that they experience throughout their careers. In addition, 50 percent of American workers are at risk of being unable to maintain their standard of living in retirement. Even those who take extraordinary steps—like working until 65 (five years past the current average retirement age), annuitizing all financial assets or reverse-mortgaging their homes—may not be able to maintain their current standard of living.
About Congressman Beyer
Congressman Don Beyer is currently serving his third term in the U.S. House of Representatives, representing Northern Virginia suburbs of the nation’s capital. In addition to his role as Vice Chair of the JEC, Beyer serves on the House Committee on Ways and Means and the House Committee on Science, Space and Technology. Previously, Beyer served as the Lieutenant Governor of Virginia and Ambassador to Switzerland, and built a successful family business over the course of four decades.
About the U.S. Congress Joint Economic Committee
The U.S. Congress Joint Economic Committee is Congress’s bicameral economic think tank. It was created when Congress passed the Employment Act of 1946. Under this Act, Congress established two advisory panels: the President's Council of Economic Advisers (CEA) and the JEC. Their primary tasks are to review economic conditions and to recommend improvements in economic policy. Chairmanship of the JEC alternates between the Senate and House every Congress. Currently, Senator Mike Lee (R-UT) is the Chair and Congressman Don Beyer (D-VA) is Vice Chair.