Retirement Insecurity

Aug 14 2019

When President Franklin D. Roosevelt signed the Social Security Act on August 14, 1935, one-quarter of the workforce was unemployed and half of all seniors lived in poverty. Since then, Social Security not only has prevented tens of millions of men and women from falling into poverty, it has become the bedrock of retirement security for all Americans.

However, for millions of Americans, the “three-legged stool” of retirement—Social Security, pensions and private savings—is coming apart. Since the late 1980s the percentage who receive traditional pensions has been cut almost in half. Furthermore, less than half of wage earners have defined contribution accounts like a 401(k) or IRA. One-third of near retirees—those ages 55-64—have neither a defined benefit pension nor a defined contribution plan.

As a result, half of American households 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 living standards. Worse, forty percent of workers ages 50-60 who are not currently poor would be poor if were they retire at age 62. Women, Blacks and Hispanics are at substantially greater risk of being poor in retirement.

STATEMENT OF VICE CHAIR CAROLYN B. MALONEY

Introductory Letter

I am pleased to share the Joint Economic Committee (JEC) Democratic response to the 2019 Economic Report of the President. The JEC is required by law to submit findings and recommendations in response to the Economic Report of the President (the Report), which is prepared and released each year by the Council of Economic Advisers (CEA).

This year’s Report is substantially different from those of previous administrations, which largely were careful, research-based and data-driven assessments of the economy supported by mainstream economic theory. Instead, the 2019 Report misconstrues wellestablished facts, cherry-picks data, relies on economic theories widely rejected by mainstream economists and entirely omits critical subjects. As a result, it seems motivated more by politics than economics.

The Report, like President Trump, claims full credit for economic conditions that he mostly inherited from his predecessor. It altogether ignores the fact that average monthly job growth was stronger during the last two years of the Obama administration than the first two years of the Trump administration, the period examined in the Report. At the time of the president’s inauguration, the unemployment rate was 4.7 percent and trending down and the economy had added jobs for 76 straight months. The president implausibly has claimed that he has achieved an economic turnaround, a claim that has been refuted by the facts.

Read the report