Offbeat Social Security will not protect retirees from rising income inequality, study finds

19:06  07 august  2018
19:06  07 august  2018 Source:   cnbc.com

3 ways to boost your Social Security benefits in your 60s

  3 ways to boost your Social Security benefits in your 60s It's not too late to increase your take-home from America's most important social program.As for future retirees, national pollster Gallup found a strong expected reliance in an April 2018 survey. When polling nonretirees, Gallup observed that 30% expect Social Security to be a "major source" of income during retirement, with another 54% forecasting it to be a "minor source" of income. Overall, this combined 84% that will need Social Security in some capacity when they retire ties a high-water mark for nonretirees over the past 15 years.

In 2013, Social Security provided benefits to 58 million people, including 41 million retirees and dependents of retirees , 6 million Finally, we provide two simulations that highlight the impact that rising income inequality has had on Social Security ’s finances over the past three decades.

The top 1 percent took home 20 percent of the income , according to a study by economists In other words, subtracting all taxes, and adding all income from Social Security , welfare, and other Ten years later, it only rose to an hour. Technology, not globalization, feeds income inequality .

If income inequality continues to grow, so too will the gap between wealthy and struggling retirees.

That's the takeaway from a new report by the Urban Institute, a progressive think tank in Washington, D.C., and funded by the Department of Labor, which analyzed how rising inequality will shape the landscape of American retirement.

"People have this perception that with Social Security, retirement income is more protected from earnings inequality, when in fact that's not the case," said Damir Cosic, a research associate in the Income and Benefits Policy Center at the Urban Institute.

Social Security benefits, along with defined contribution plans and other retirement savings options, generally are tied to previous earnings, which are increasingly a story of imbalance.

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  The 1 Thing You Have to Know About Social Security's COLA This explains why seniors are struggling to keep up with inflation.Two separate but similar polls from Gallup in April demonstrate this reliance. When questioning existing retirees who are receiving a benefit, 57% noted that the program represents a "major" income source, whereas 33% opined that it was a "minor" source. This means 90% of current retirees need Social Security to make ends meet, whereas a mere 10% aren't leaning on it as a source of income.

Economic inequality is the difference found in various measures of economic well-being among individuals in a group, among groups in a population, or among countries.

The trend toward income inequality among working people is about to follow them into retirement. One is the rise of defined contribution retirement plans such as 401(k) plans, which have its pledge not to cut Social Security benefits," since there was plenty of room to cut without harming retirees

People who fall near the bottom of income distribution, after factoring in inflation, have actually seen their wages decline over the past few decades, according to the Institute. Meanwhile, the share of earnings going to the top 0.1 percent has swelled by more than 400 percent between 1971 and 2001.

The researchers simulated an experiment to understand how inequity in earnings reverberates into retirement.

A lot, it turns out.

People aged 67 to 75 in the top fifth of the income distribution will see their income increase by 3 percent in 2045, 5 percent in 2065 and 7 percent in 2085, the researchers found.

On the other hand, those aged 67 to 75 in the bottom fifth of the income distribution will see their income fall by 3 percent in 2045, 6 percent in 2065 and 13 percent in 2085.

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Money Culture. May 15, 2018. Why Retirement Inequality is Rising . Having a low income doesn’t necessarily mean a retiree can’t live comfortably. What matters is how much of their earnings they will be able to replace with Social Security and any savings.

Millions of retirees do their utmost to ensure that they get as much in Social Security benefits as they possibly can after they retire . Given how hard it can be to make ends meet on a fixed income , seniors have a lot of incentive to take advantage of opportunities to see their monthly checks rise in

Many retirees today are already finding it hard to get by. The average monthly Social Security payment is $1,404, and more than 40 percent of single adults receive more than 90 percent of their income from that check, according to the government.

Meanwhile, debt among older people is on the rise. In 2016, the average debt in families in which the head of the household is age 75 or older was $36,757. That is up from $30,288 in 2010, according to a recent report by the nonprofit Employee Benefit Research Institute in Washington.

The actual results of climbing inequality on retirement are likely to be even higher than the Institute's estimates, Cosic said, because he and his colleagues accounted for only one of the drivers of the divide: the so-called education premium, the fact that degrees are more in demand, while people with less schooling are seeing their paychecks shrink.

To be sure, that effect is severe. In 2065, people who fall between the ages of 67 and 75 who only have a high school degree will have seen their income fall by 8 percentage points, compared to a 16 percent increase for those who completed college.

More retirees are broke and going bankrupt

  More retirees are broke and going bankrupt The ranks of seniors filing for bankruptcy has surged fivefold, thanks to a breakdown of the social safety netEven though the U.S. population is aging, the spike in older Americans entering bankruptcy far exceeds the demographic shift, according to new research from the Consumer Bankruptcy Project, which analyzed data from bankruptcy court records and written questionnaires. About 100,000 of the 800,000 annual bankruptcy filings are from households headed by seniors, or about 12.2 percent of all filings.

We must come together and reduce income and wealth inequality by Everyone in this country who studies hard should be able to go to college regardless of income . Expanding Social Security by lifting the cap on taxable income above 0,000.

If The Left Really Cared About Income Inequality , They’d Support Privatizing Social Security . Wealthier people tend to live longer, and hence spend more years receiving Social Security than lower- income people, making the distribution of benefits go inefficiently towards wealthy retirees who

But in addition to employers' demand for high-skilled workers, income inequality is projected to worsen under globalization, rapid technological advances, automation and the loss of employees' bargaining power, according to Cosic. Therefore, he said, "things are likely to get even worse if current forces persist."

Over the researchers simulation period, the average retirement income grows only half as fast as the average lifetime earnings.

That's in part because they forecast Medicare premiums will steeply increase. In addition, they estimate the average income from defined benefit pensions will drop substantially, since the share of employers that offer such plans is dwindling.

Cosic said these findings are a warning sign, as low-income people, before and after retirement, are already suffering.

"That that income would get reduced further is striking," he said.

These Americans are filing for bankruptcy more than ever .
New research warns that seniors are in a financial crisis, and a big public policy debate on how wide the government safety net should be is looming.Load Error

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