The retirement age for Social Security increased in 2009 from 65 to 66 years. Workers can collect at 62 if they give up 25 percent of their benefits for the rest of their lives. In a sharp change from past decades, last year three-quarters of all workers filing for Social Security took early benefits.
More and more older workers are being driven out of the workforce through layoffs, business closings, or because they dont have the required skills. The unemployment rate for people 55 and older reached the highest level ever recorded in April, and continued to climb up to 7.35 percent in July. Older workers on average are also unemployed longer; one-third have been out of work for at least a year and the average time without a job is now 35 weeks.
The increase in older workers drawing Social Security early is also due to the move by employers to replace defined-benefit retirement plans with defined-contribution retirement plans, [commonly known as 401(k)] allowing employers to shift more responsibility for retirement income to the employee, states a March 2010 memo by the U.S. Bureau of Labor Statistics.
Due to the financial crisis, many of these savings accounts are worth a fraction of what workers anticipated for their retirement.
Older women face greater poverty
Today more than 70 percent of households with the lowest incomethose in the bottom thirdare considered at risk of not having enough resources to pay for basic expenses and uninsured health-care costs upon retirement. This fact illustrates the inadequacy of current Social Security benefits and how further cuts will fall more harshly on the lowest paid workers.
Social Security is the only source of income for 42 percent of women over 62, and the poverty rate for this group is 23 percent, compared to 5 percent for retired couples. The poverty rate climbs significantly for single women who are Black or Latina. The government defines poverty for an individual over 65 as less than $9,669 annually.
Women earn one-third less on average of what men do over a lifetime, meaning their Social Security checks are smaller. Women often take time off from work to care for children or older family members. Because they also live longer than men, they need more reserves. As a result, elderly women are the largest segment of the population living in poverty.
Social Security won through struggle
The bosses and government present Social Security as some kind of government handoutone that society can no longer afford. Workers have a different view. For workers it is getting back a small portion of the social wealth theyve created over a lifetime of labor.
Social Security was won in the mid-1930s as part of rising labor battles. Workers also won unemployment compensation and other measures that helped to unify the working class in the face of economic devastation. When the rulers passed the legislation, they never expected to pay the majority of it because at the time the average life expectancy in the United States was below the 65-year retirement age.
A July study by the Center for Economic and Policy Research, entitled The Impact of Social Security Cuts on Retiree Income, documents the impact on those in the lowest income brackets of several proposals being discussed.
The study points out that raising the retirement age to 70 in 2036, which some Democrats and Republicans are calling for, means hefty cuts in benefits over a workers lifetime. Under current law the retirement age goes up to 67 years in 2022.
The proposal to decrease cost-of-living increases by 1 percent would have the cumulative effect of up to a 20 percent benefit reduction for workers who reach the age of 85 years.
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