February 18, 2013

Fiscal trouble ahead for most future U.S. retirees

After a long era of higher living standards for the elderly, most people will be worse off than their parents in old age, experts say.

Michael A. Fletcher / The Washington Post

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DEBATE OVER PROGRAMS' FUTURE

Some lawmakers and other advocates say the best way to cope with the growing gap would be to further expand Social Security and Medicare benefits, or to add another layer of taxpayer-subsidized savings that workers could use only for retirement.

"We need to do more to help American families cope with this looming retirement crisis," Sen. Tom Harkin, D-Iowa, chairman of the Committee on Health, Education, Labor and Pensions, said at a hearing late last month. "Hardworking Americans deserve to be able to rest, take a vacation and spend more time with their grandkids when they get older."

But many policymakers are pushing to rein in the nation's debt by trimming Medicare, Medicaid and Social Security benefits. Those programs are the primary drivers of the long-term deficit but are also financial mainstays for the vast majority of the nation's retirees.

Both Medicare and Social Security already are on course to provide reduced benefits for future retirees – reductions that will grow deeper if lawmakers follow through on new proposals to further trim the programs.

With the Social Security retirement age moving to 67 under a federal law passed in 1983, people who leave the work force earlier – and the vast majority do – will see smaller payouts.

Health-care costs continue to outpace inflation, meaning more out-of-pocket expenses for future seniors. Retirees are also slated to pay more for their health care with Medicare premiums, which are deducted from the Social Security checks of senior citizens, set to rise from 12.2 percent to 14.9 percent by 2030.

James Marzano, 60, was on his way to a comfortable retirement when he lost his job at a telecommunications company in 2002. "People talk about a lost decade; that's what I've been through," he said.

Marzano, a Tampa, Fla., resident who is married to a retail worker and has a son who is a high school senior, spent most of the past decade in and out of contract jobs and other posts that paid far less than he was used to. He was forced to dip into his 401(k) account to make ends meet, and even now that he has found a good job, he says, his savings is maybe 60 percent of what it was 10 years ago.

"If everything had stayed status quo from 2002 until 2012, I might be doing what I wanted to do today," he said. "But, as it stands, I am nowhere near ready to retire."
 

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