Vangela M. Wade
- Social Security recipients are expected to receive an 8.7% cost-of-living increase, the biggest in four decades.
- But the increase is tied to inflation and likely won’t offset the higher prices for basic necessities.
- Retired or not, many Americans are struggling to survive. Too many have to make a choice between buying food or even saving for retirement.
For more and more Americans, dreams of retiring are morphing into a nightmare. The cause of this impending doom is two words: financial insecurity.
The New School’s Schwartz Center for Economic Policy Analysis predicts that 40% of middle-class older workers will become poor or near-poor in retirement. Simply put, they’re a house of cards waiting to fold.
The news gets worse each month as new inflation data is released. In September, consumer prices increased 8.2% from a year ago. And for people already struggling to pay bills, higher prices for basic necessities cut deeper into already thin budgets. Food prices last month shot up 13% from the previous year and gas prices are up more than 18% from 2021.
Social Security benefits rise with inflation
One bit of good news: Social Security recipients are scheduled to receive an 8.7% cost-of-living increase in January. That’s the biggest increase in four decades, but it’s one driven by the spike in inflation.
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While those in power and in the news media discuss plunging stock markets and the sharp pain that causes millions of retired Americans, another segment of our society is overlooked. They’re the people who never had the means to invest in retirement accounts because every dollar they made was tightly accounted for.
For them, life is an ongoing economic recession – even after the S&P 500 once again soars to new heights. Without intervention, more older Americans will fall into this category. So much so that those living below or near the poverty line are predicted to increase by 25% by 2045.
Financial insecurity for people who have retired is particularly painful in my home state of Mississippi. Here, almost a quarter of older Black residents live in poverty, nearly triple the national average.
Many Mississippians who are still working struggle to survive; they’re also destined to be poor in retirement. My state is failing its people, whether it’s refusing to expand Medicaid to working Mississippians or ending desperately needed rental assistance. By the time most Mississippians reach 65 or 75, there is no hope left.
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Pay for food vs. save for retirement
It isn’t just a problem in Mississippi. It’s a national crisis, with systemic failures at the federal level. Too many Americans have to make a choice between putting food on the table and saving for retirement. And people understandably choose immediate survival over a more comfortable life that’s decades away.
It’s easy to say people should just save more for retirement. But that doesn’t address the systemic issues that prevent people from saving for retirement. As president and CEO of the Mississippi Center for Justice, I’ve had countless conversations with former business owners, barbers, cosmetologists and people across other professions about the difficulties of retirement.
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Often, their stories are the same. With the thin margins of running a small business, enough wasn’t left over to pay into Social Security. Even worse, they couldn’t receive the security blanket of an employer pension plan or an individual retirement account. As a result, former stewards of our communities are now struggling to survive in their final years.
I also know the haunting stories of retirement insecurity from my parents. They were proud business owners who stretched every dollar they could. Now retired, they stretch meager Social Security benefits each month. Like many seniors, my parents didn’t have sufficient funds to establish a retirement fund and now struggle – rather than thrive during retirement.
Are we in a recession? America’s economy stinks no matter what you call it.
But it doesn’t have to be this way. The organization I lead recently hosted a symposium featuring former Maryland Lt. Gov. Kathleen Kennedy Townsend and others to discuss retirement security. Our discussion examined solutions to this crisis, including expanding retirement coverage, portability of employment savings and other issues pertaining to older Americans and retirement.
Fixing the retirement crisis is possible, and I implore our elected leaders to begin protecting our seniors.
Older people deserve to retire securely and with dignity. The fact that millions don’t is an indictment of our system. It’s high time for our political leaders to do right by them, and that long road begins with reforming retirement.
Vangela M. Wade is president and CEO of the Mississippi Center for Justice, a nonprofit, public interest law firm committed to advancing racial and economic justice.
