BABY BOOMERS are retiring early in America because of the pandemic, but there seems to be two parallel America for those who were born between 1946-1964 as they look forward to their twilight years.
At least 1.7 million older workers retired early because of the pandemic crisis, a new report by the New School for Social Research’s Retirement Equity Lab revealed.
But as Bloomberg.com reported, this “surge in early retirement exposes inequalities among U.S. Baby Boomers.” Two parallel groups of retirees are those who have college degrees and have enough savings and investments to retire, while the other group — a bigger one at that — comprises those who do not have higher education and less job security.
“The COVID-19 health crisis is creating two classes of early retirees”, according to the report. “People who have investments are taking advantage of the unprecedented surge in shares and home values to enjoy their silver years.”
These more fortunate people mostly have college degrees and have been blessed with a good job that grew their nest egg and savings to live comfortably during their retirement years.
The pandemic highlighted their vulnerability which urgently compelled them to retire early so they could enjoy life while they still can, even it would mean dealing with a “penalty” for getting part or most of their retirement benefits during early retirement at 55 until they reach 65. This is especially true for those high-stress professions like doctors and nurses whose lives have been most at risk and have been exasperated during the pandemic.
“Meanwhile, many low-paid workers without much retirement savings found themselves forced out of their jobs with little prospect of finding employment again. Retiring before the full retirement age will result in a cut in their Social Security benefits, by as much as 30%,” Bloomberg reported.
“Workers age 55 to 64 without a college degree retired at a 5% faster pace during the pandemic, while retirement for that age group with a college education declined by 4%, according to the Retirement Equity Lab report. At older ages, over 65, college-degree holders were more likely to exit the labor market than pre-COVID, however.”
Black workers without a college degree experienced the highest increase in retirement rate before 65, jumping from 16.4% to 17.9% between 2019 and 2021, the data show.
The researchers found that older workers without a college degree had median household retirement savings of only $9,000 in 2019, compared with $167,000 for those with a college degree.”
“The pandemic is revealing the main fault line in our broken retirement system — inequality,” said Teresa Ghilarducci, economist and director of Retirement and Equity Lab.
The painful fact revealed by the study is that “older workers without a college degree had median household retirement savings of only $9,000 in 2019, compared with $167,000 for those with a college degree.”
How can these less fortunate older workers retire with that meager savings despite slaving themselves for decades with wages that are inequitable and definitely not livable? How can they support themselves until they die?
While these older workers without a college degree are daunted by how unkind the job market has been to them, something has to be done to correct this broken system and help those who have not saved enough for their retirement a chance to re-enter the job market. There should also be safety nets for those who are forced to retire without fault of their own.
Here are some of the policy recommendations presented by Retirement Equity Lab based on the findings of the study:
Prohibit age discrimination
Without strict anti-discrimination laws and enforcement, older workers cannot compete for jobs. Several studies document the effectiveness of state and federal anti-discrimination laws in combating age discrimination and increasing employment of older workers. Yet, the Age Discrimination in Employment Act (ADEA) protecting older workers from age discrimination was weakened by a 2009 U.S. Supreme Court Decision. Congress must strengthen the ADEA and ensure that any discrimination motivated by age is illegal.
Extend and increase unemployment benefits
Laid-off older workers experience longer spells of unemployment, contributing to why many give up looking for work and retire involuntarily.12 Increased unemployment benefits—more than the $300 a week set to expire in September 2021—can help older workers avoid dipping into their retirement savings and claiming Social Security early.
Lower Medicare eligibility age to 50 & make Medicare first payer
Lowering the Medicare age to 50 would ensure older, laid-off workers get the care they need. Moreover, making Medicare first payer—having it cover medical expenses before private insurance—would lower firms’ costs associated with providing health insurance to older workers. Reducing the health insurance cost of hiring older workers would help prevent involuntary retirements while increasing older workers’ health coverage.
Expand Social Security
Increasing Social Security and instituting a minimum benefit will soften the blow for workers who are forced to retire before they are ready and prevent many from falling into poverty. Congress should expand Social Security benefits by $200 per month for everyone and increase the Special Minimum Benefit up to 125% of poverty levels.
Create a federal older workers bureau
An Older Workers Bureau at the U.S. Department of Labor would formulate standards and policies to promote the welfare of older workers, improve their working conditions, and advance their opportunities for profitable employment.
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The opinions, beliefs and viewpoints expressed by the author do not necessarily reflect the opinions, beliefs and viewpoints of the Asian Journal, its management, editorial board and staff.
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Gel Santos Relos has been in news, talk, public service and educational broadcasting since 1989 with ABS-CBN and is now serving the Filipino audience using different platforms, including digital broadcasting, and print, and is working on a new public service program for the community. You may contact her through email at firstname.lastname@example.org, or send her a message via Facebook at Facebook.com/Gel.Santos.Relos.