Can those aged 45 to 64 be saved from misery in retirement? How?

Eric Kingson said the impending retirement security crisis ought to be a public concern not only because “people should be able to maintain a reasonable standard of living” in retirement, but also because it will create “all sorts of consequences: consequences for [retirees]; but also consequences for their younger family members.” More and more retirees could be forced to depend on their children, he said, which would significantly cut into those children’s own income and savings during their peak earning years, exacerbating the retirement security crisis for younger generations.

Kingson believes this crisis is an opportunity to “start imagining what kind of a world we want…Human dignity is important,” he said. “These programs [those that help prevent elderly poverty] give expression to core values in our society. If you want to be cynical, they’re quaint or they’re old-fashioned, but…fundamentally there’s something decent about providing protection for ourselves and our neighbors. That’s something we need to get back to in this country.”

Fatalism, especially with regard to 55- to 64-year-olds

A common view is that because of political resistance, the type of legislation necessary to make a marked difference in retirement security for future retirees is impossible; for workers aged 55 to 64, most say, it is too late for most options anyway. Anthony Webb, a senior research economist at the Center for Retirement Research at Boston College, told Remapping Debate retirees face three options: they can work longer, attempt to save enough to guarantee retirement security (which he described as “implausible”), or face dramatically reduced levels of consumption in retirement. “Now, given those choices, what would you choose?” We asked whether public policy changes, such as boosting Social Security or some other form of government spending, could create a fourth choice. He replied, “Given the current political climate, I think that the discussion is about how we keep what we’ve already got rather than further expanding benefits.”

This attitude of fatalism, we found, is common. Barbara Butrica, a senior research associate at the Urban Institute, for example, said, “I think most people recognize Social Security is not going to get better; in fact, it’s going to get worse for certain groups.”

Even those who support expansive public policy to counteract the downward trend in retirement security expressed the belief that little will be done for the 55- to 64-year-old cohort. Teresa Ghilarducci said that, aside from forcing themselves to work longer, there are two scenarios in which these citizens could have relatively more secure retirements: “If you’re in your fifties, your only solution is to reduce your living standards by 20 percent and [increase] your savings by 20 percent. You have to start your deprivation early so it doesn’t seem so bad when you get older. Or, the government could decide to boost Social Security benefits.” Ghilarducci never indicated such a boost is likely, however.

Joshua Freedman, a policy analyst in the Economic Growth Program at the New America Foundation, agreed that the current public debate, particularly in the wake of President Obama’s budget proposal, is focused on cutting Social Security. As a result, he believes major legislation that could markedly boost retirement security is unlikely to pass in the near future. However, he thinks it is important that more people begin to identify and talk about the broader issue that “people [won’t] have adequate standards of living in retirement no matter what they do.” If that happens, in the long-term, Freedman said, addressing that broader question would yield “a much more rational and sane look at how we can solve the underlying human problem.”

More room to maneuver for 45 to 54 year olds

For younger workers — those currently 45 to 54 — the future is, potentially, brighter. When asked for ideas on how to help this cohort, experts produced a range of policies that could help them to save enough for retirement to maintain their pre-retirement living standards.

These 45- to 54-year-olds are among a broader group of middle-aged workers who, many believe, have fallen victim to what Eric Kingson described as a “failed private pension system.” Monique Morrissey said that 401(k) plans and other private savings arrangements have failed to adequately prepare workers for retirement: “For many workers, if they’re not getting a tax break and an employer match, a 401(k) might actually be a really bad way to save money…The fees are high. They can easily erode a third of what you accumulate in them.” In addition, she said, private savings plans in general lead people to underestimate how much they will need in retirement. People see a seemingly large lump-sum value in their 401(k) and “think they are rich,” but when spread over decades of retirement, such sums become insubstantial.

According to Dean Baker, co-director of the Center for Economic and Policy Research, the creation of new and better types of retirement savings plans that fix such deficiencies could help 45- to 54-year-olds become more secure in retirement. “They can accumulate something that can provide a boost to their living standards in retirement, so [new forms of retirement savings] would help them,” he said.