The Nieman Watchdog–Harvard’s journalism faculty blog–recently published a commentary speaking to the looming “retirement crisis” and the problems with the federal government’s current approach to dealing with it. The author notes that retirement planning is not what it used to be as many workers today are “facing a grim future in which the kind of retirement plans their parents were able to take for granted is out of reach.” Our New York elder law attorneys have discussed these changing dynamics and the demand they place on thinking about long-term care plans in new ways.
The commentary notes that it is folly to presume that one will be taken care of in the future, because the growth of “defined contribution plans” (as opposed to “defined benefits plans”) means that retirement savings often hinge on the performance of the markets. It is argued that this shift has made income from private pensions smaller and less reliable than in the past. That issue, coupled with rising health care costs, places a real strain on many retirement plans.
Considering those concerns, it is perhaps surprising that federal policymakers have spent most of their time discussing cuts to Social Security, Medicare, and Medicaid. The problem also exists at the state level, as New York Medicaid planners have been forced to watch as state policymakers consider a wide range of proposals to revamp the healthcare system that so many local seniors rely on for long-term care support.
Some suggest that the aging population combined with possible cuts to stalwart federal programs like Medicaid will ultimately send many more seniors into poverty. This is particularly true of those who have not conducted any elder care planning ahead of time. According to the latest figures from the U.S. Census Bureau, last month roughly 16% of all seniors were living in poverty. It is likely that the rate will rise significantly as seniors are forced to pay more for their health care to make up for possible program cuts. Right now seniors spend about 16% of their income in out-of-pocket health care costs. However, even under the current law, that rate is expected to increase to roughly 30% in the next few decades.
These frightening statistics are one of the reasons that researchers at the Center for Retirement Research at Boston College suggest that more than 50% of all baby boomers will not have economic security in retirement. The research identified “economic security” as income at 70% to 80% of their working wage.
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