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Elders' Triple Economic Whammy

Posted Apr 03 2009 11:50pm

When we – people 65 and older – were starting out in the world, there were no investment opportunities for ordinary workers. That was for rich people. If we were lucky, our employers offered pension plans (I never worked for one), but what we did have was a habit of saving.

Growing up during the Depression or as children of people who did, we learned the importance of putting money aside. Mostly, we did that in individual bank accounts which paid, back then, about two percent.

Mutual funds had been around since the 1920s, but they did not catch on until after a 1975 IRS change allowing individual retirement accounts (IRAs). In 1978, 401(k) plans (named for a new section of the IRS code) allowed workers to defer paying taxes on a percentage of their salaries until after retirement.

Then, in the 1990s, the internet happened, brokerage houses offered cheap, online trades and suddenly anyone could invest in the stock market. Advertising made it seem easy and we were exhorted to jump into Wall Street. It was mostly young people who did. Many who were older, like me, did not feel competent to choose investments wisely and continued to rely on more traditional financial advisers if we had enough to warrant the fees.

Through all these changes, we were led to believe that our diligence, together with Social Security, would see us through our old age in relative comfort.

Whammy No. 1: Drained Savings
In 2008, all that changed. We discovered that the people with whom we had invested our life savings had made themselves wealthy – obscenely so in many cases – while plundering 30, 40, even 50 percent and more of the modest nest eggs we had accumulated. As investment income was slashed over the past year, it has been devastating.

"About 433,000 unemployed Americans age 65 and older were actively seeking employment in February, more than twice as many as in November 2007, just before the recession began.

"Another 1.3 million adults age 55 to 64 were unemployed. 'This is a daunting economy for older people. A lot of older people are coming to see us that are scared or bewildered,” says Cynthia Metzler, president and CEO of Experience Works, a nonprofit organization that helps older people retrain for new jobs. 'We have people who are in their 80s who are taking on new jobs.'"
- U.S. News & World Report, 31 March 2009

Whammy No. 2: Forced Early Retirement
Those numbers don't include millions of older people who are seriously underemployed in supermarkets, fast-food joints or as helpers at Home Depot making salaries that don't begin to cover even modest expenses their savings had allowed and they are now committed to.

The media is only now beginning to notice – and barely - that many old people are in a desperate bind with much of their savings wiped out and no possibility of future employment as companies lay off more than half a million people each month. March figures report 663,000 layoffs in that month alone, in addition to 706,000 in February and 655,000 in January – a total of more than 2 million people out of work in the first quarter of 2009.

For older workers, this amounts to forced early retirement. Just as the medical advances of the 20th century have given us an average of 30 years more life – healthy life in most cases – and the children are finished with college allowing old people to increase their amount of retirement savings, the employment rug has been ripped out from under them along with their evaporated investments.

Whammy No. 3: Stuck in Their Homes
In addition, elders who had been planning to move into continuing care communities – those that provide health care starting with independence through assisted living and nursing care – find that their homes have lost as much as 20 percent of their value (much more in some regions) - if they can find a buyer at all.

“...hundreds of thousands of older Americans...are sitting on homes they cannot sell, watching dividends disappear and, in many cases, putting off much-anticipated moves into retirement communities.”
- The New York Times, 2 April 2009

Some of these people are in need of care now, but are going without because with the crash of the housing market they do not have the cash they expected and planned for from the sale of their homes.

So: lost savings, lost jobs, lost home value – a triple whammy. But wait. There's more.

On top of the triple whammy, meals on wheels programs, home health care visits and senior centers around the country are cutting back services and in some cases, closing. People who were able to continue to live independently due to these services, now cannot. Because selling their homes is not likely, they are left adrift, sometimes in actual danger without help.

Additionally, some physicians are "firing" their Medicare patients while fewer doctors are accepting new Medicare patients and even when they do, the number of internists, who have been taking up the slack from the dramatically diminishing number of geriatricians, is decreasing.

Let's go through this again, then: lost savings, lost jobs, lost home value, lost community services and lost medical care.

Further, yesterday, Senator John McCain announced his alternative to President Obama's budget and to that of Congress. It includes taking an axe to Social Security and Medicare:

“McCain would achieve those cuts mostly from entitlements like Medicare, Medicaid and Social Security, spending $922 billion less than Obama over the next five years on those and other 'mandatory' programs and $3.1 trillion less over 10 years, according to his office.

“'There is no expert or ordinary citizen in America that doesn’t agree that we have to reform Medicare, Social Security and the other mandatory spending programs which are consuming a larger and larger part of our budget,' McCain said on the Senate floor.”
- CQ Politics, 1 April 2009

Easy for Senator McCain to say with his ten homes, rich wife, $2000 monthly Social Security benefit for pocket change and Senate health care. His budget plan would create a commission to “retool” those programs, although not to affect people 55 and older. “Retool” means “cut.”

McCain's budget has no chance of passing Congress, but it is the highest-level opening salvo in the conservative agenda to eviscerate Social Security, Medicare and Medicaid - which would be a sixth or seventh whammy (I've lost count) that affects elders more than younger people.

It is not that I wish to make light of the suffering of all Americans at this time. But elders are my special interest on this blog and unlike the youngest adults whose careers may be delayed, and unlike midlife adults whose retirements may need to be postponed (which, if you believe surveys, they say they want to do anyway), old people are taking the brunt of it.

I don't mind tightening my belt along with everyone else in the country. As the old saying goes, shit happens and we all, necessarily, will live with less for a long time to come. What I don't like is the apparently willful disinterest in how deeply elders are being disproportionately affected.

[ At The Elder Storytelling Place today, Marvin Waldman is back after a long absence with a poem, A Wake for My Dick, Please. ]

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