There is a group of Americans who don’t have jobs, and are chronically short of money and assets but, unless they have been on the street for a long time because of an ongoing addiction problem or mental illness, do not suffer homelessness like the rest of the population: People over age 65.
Nearly half of them are very poor. A new study published earlier this week shows that a large portion of America’s older population has very little savings in bank accounts, owns almost no stocks and bonds or real estate, and dies with virtually no financial assets to their name.
Some 46% of senior citizens in the United States have less than $10,000 when they die. They rely almost entirely on Social Security as their only means of support, according to the report co-authored by James Poterba of the MIT, Dartmouth’s Steven Venti and David A. Wise of Harvard. Their findings are part of a new book with the cumbersome title Investigations in the Economics of Aging.
“There are substantial groups that have basically no financial cushion as they are reaching their latest years,” cautions Dr. Poterba, the Mitsui Professor of Economics at MIT.
This means many seniors lack the ability to withstand financial shocks on their own, such as medical treatments that may not be covered by Medicare or Medicaid, or other unexpected and costly events.
Indeed, if it was not for the financial floor provided by Social Security and Medicare, there is a significant risk that many of the nation’s elderly would be destitute, sick and homeless. The reason that people over 65 are coping reasonably well with the Lesser Depression is because money shows up in their bank account on the third of every month like clockwork, thanks to Social Security – a benefit working Americans pay for through the FICA payroll deduction during their working years. Medicare premiums are paid with a small deduction from Social Security.
Not An “Entitlement”
As I approach my own dotage, I want to scream at the television every time I hear Mitt Romney or other Republicans call Social Security and Medicare an “entitlement.” The very word implies a handout, a freebee that, somehow, retirees are getting for nothing despite the fact that they funded the benefit they now receive throughout their working lives via a payroll deduction.
Both of my grandfathers were young workers when Social Security came into existence and money for it started being withheld from their pay. Over the years, each told me stories about how, even during the so-called Roaring Twenties and before the Great Depression knocked America on its keyster, seeing ragged looking, elderly men and women begging on the streets was common. Papa, who was my mother’s dad, remembered how when “giving some chap a few pennies, you’d think I’d taken them for dinner at the Pfister,” a swanky Milwaukee hotel of the time, happened every day.
When each of my grandfather’s retired, they lived decently for twenty or more years thanks to the monthly check from Social Security that they’d paid into for since the mid-Thirties.
Yet the Republican Party wants to send retirees back to when the elderly often lived an impoverished life by cutting benefits, privatizing the entire plan and doing away with Medicare. Romney endorsed the budget of conservative Rep. Paul Ryan (R-Wi), a devotee of pseudo intellectual author Ayn Rand and the GOP’s go-to guy on budget issues, which does this. Ryan thinks the whole idea of the elderly relying on a government program – even one that they paid for – “destroys freedom.”
Ryan is the subject of a milk-curdling profile by Ryan Lizza in this week’s issue of The New Yorker. Lizza quotes Ryan as saying, “Only by taking responsibility for oneself … can one ever be free and only a free person can make responsible choices – between right and wrong, saving and spending, giving or taking.”
In other words, Ryan’s thinking is identical to most other conservatives: I have mine and you’re on your own, which is the basis of not just Rand’s books but the entire right wing view of the world today even if that means more people are left impoverished and living on the street through no fault of their own.
Atlas Shrugged, Rand’s best-known work, was assigned reading in my 10th grade English class. My book report dismissed the entire work as being created by “a puerile writer with a half-baked political idea that the 1930s proved is nonsense.” I got an A on it yet somehow Ryan managed to get himself elected to Congress on the strength of his devotion to Rand and elevated to chair of the House Budget Committee.
If they can be believed, Romney and Ryan insist that neither current Social Security recipients nor people approaching retirement would be affected by their draconian reshaping of America’s only real safety net. But because future generations would not be able to rely on either Medicare or Social Security, it’s likely they will find themselves homeless not long after their 65th birthday.
After all, a diminishing number of companies offer real a pension plan with a guaranteed benefit, and individual IRA and Keogh plans are subject to market ups and downs. Just ask people who retired between 2008 and 2010: They expected to have enough money in their IRA but find themselves strapped for cash as the stock market downturn erased decades of gains.
“If it weren’t for Social Security, I’d living in a tent,” maintains 68 year old Henry Kasper, the retired owner of a neighborhood hardware store in northern California that his son and daughter now operate.
He watched his IRA lose more than half its value when the recession hit and now struggles to make the monthly mortgage payments on the two bedroom condo he and his wife bought in the 1990s. He considers privatizing even part of Social Security as something “only rich SOBs think of doing.”
Just as mind-boggling is that, at the moment, Romney leads Obama among middle aged, white, working class males – the very people whose retirement would be negatively affected the most by Romney-Ryan plans. So not only would a Republican administration and Congress in 2013 cost them more in taxes while they are working, according to the scrupulously non-partisan Tax Policy Center, it would leave them with nothing when they retire. They’d be on their own for both health care and income security.
The reason the United States has so few elderly homeless people is because Social Security provides an income baseline regardless of how well or poorly the market is doing, and because Medicare takes care of the cost of their health care. To take this away from retirees is to condemn them to living the same lousy existence my grandfathers described the way old people lived one hundred years ago.
There is a big enough problem with homelessness now without adding to the morass by forcing retirees into homelessness and destitution during their remaining year.
Author and journalist Charley James’ next book is about his experience becoming homeless. When published, Charley will donate a percentage of his advance and royalties to homeless organizations.
Follow Charley on Twitter @SuddenlyHomeles.
Posted: Thursday, 9 August 2012
Charley’s next book is about his experience being homeless. When published, he will donate a percentage of his royalties to homeless organizations.