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Older Americans Month

Today, May 1, marks the start of Older Americans Month. What better a day to discuss the retirement security of older Americans? Not so long ago retirement security was thought of as a three-legged stool, consisting of employer-sponsored pensions, personal savings and Social Security.  

Today the only leg of that stool that remains intact is Social Security. More and more employers are breaking their pension promises by freezing their traditional pension plans or by suspending their 401(k) matching contributions. And most workers have very little in personal savings

What remains clear, however, is that we need something more. Take one look at the statistics for older Americans today and you'll see why. For 2009 the average annual Social Security benefit is $13,383, only slightly more than the federal minimum wage. And, in 2007, half of Americans age 65 and older who had income from financial assets received less than $1,585 a year in income from those assets. Significantly, older Americans with pensions fared much better than those without them. The median annual income of retirees with pensions was $31,227 while the median annual income of retirees living only on Social Security was $16,527.  

And for women, the numbers are far worse. According to the Congressional Research Service, in 2007, the median annual income for women age 65 and older was $13,877 compared to $24,142 for men. The Elder Economic Sufficiency Index released by Wider Opportunities for Women shows how elders with low- and modest-incomes are challenged to cover their living costs today, as costs for basic needs are rising much faster than their incomes. That's why the Pension Rights Center's Women's Pension Project is working to make retirement plans fairer to women. 

At the same time, something must be done to ensure that the three-legged stool of retirement security is redesigned and rebuilt. That's why the Center, along with three other organizations, launched Retirement USA, an initiative working toward a new retirement system that, along with Social Security, will provide universal, secure, and adequate income for tomorrow's older Americans. 

This blog entry was written as part of a blog day sponsored by Wider Opportunities for Women.  For more information, visit their blog, Elder Economic Security Initiative.


The fragility of the social security system is a myth that supports a variety of policy objectives. Borrowings from the system to balance the budget have not helped. But recalibration of pay in limits and means testing of pay outs (along with "lock boxing" the account) will go a long way to ensuring the long term viability of the stool's third leg.

I have serious doubts about the Social Security being "the only leg of the stool that is solid". By all the decent calculations and 'optimistic' estimates the SS benefit system will go bankrupt in a decade or two... Look at the demographics: in about ten years from now the Social Security tax revenues will be less than promised benefits. These pension systems always pay out from the money they get from the active workers. Now, if the number of active workers is much less than the retirees - you have a problem.

Indeed, Social Security is the only leg of the stool that is solid. It's important that we maintain this program so that is will continue to help elders in need, while at the same time strengthening pension plans, and encouraging personal savings to make the 3-legged stool stand upright again.

I cannot pretend to be very knowledgeable about these issues, but I view elder economic security as retirees having a pension plan, enough savings, and assistance from the government to live comfortably after having paid their share of taxes while employed. We have seen the important contribution of pension plans in the financial well-being of older Americans who enjoy these benefits. In an ideal society each American would have such a plan that they can take with them from job to job to ensure their future economic security. It is important that companies provide for the well-being of their workers, and that society as a whole not forget those who were once pillars of society through their workforce composition and tax contributions.

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