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.