Post-Election Politics
Reflections: Hunger

Elders’ Unique Economic Difficulties

[EDITORIAL NOTE: For those who are waiting for an email response from me, my internet connection was down for most of yesterday afternoon. I'll be catching up today.]

First it was Wall Street firms and mortgage lenders that were bailed out, then banks and a giant insurer or two. The big three auto makers (they of individual private jets) are toiling through Thanksgiving on a report to Congress due next week so they can get their slice of the bailout pie. There is no telling what industries will go begging to Washington next.

Meanwhile, the number of home sales are the lowest on record and the median sale price is down by more than 11 percent from a year ago. At the same time, the jobless rate hit 6.5 percent, the highest in 14 years and is expected to jump further in 2009.

According to surveys, most people are scaling back Christmas spending this year. Malls are empty and luxury goods retailers are complaining that even the rich aren’t spending.

What none of this tells us is the toll on individuals. But it isn’t much of a stretch, even if you’re getting by so far, to imagine the struggle of millions of people. We’ve heard a lot about those forced out of their homes due to foreclosure. For others, crucial bills like electricity, heating fuel and insurance are going unpaid.

And some people are going hungry. [See this story of middle class slide into poverty in today's Washington Post]

My heart aches for everyone who lacks a home and food. The concern of Time Goes By, however, is elders.

President-elect Obama’s announcement of a stimulus plan that creates jobs makes sense to me and as awful as it is to contemplate a national debt in the trillions, it also makes sense to accept short-term debt in exchange for re-engaging the economy. On a tiny scale, I’ve done that myself in the past and recovered. Obama's idea for creating jobs is so obvious, one wonders why it's taken a new president to do it:

“We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children and building wind farms and solar panels, fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead.”

But none of this addresses, nor has anyone in a position to do anything mentioned the problems of elders – those who are retired and near retirement – whose difficulties are unique among the generations.

Here is some of what’s been bothering me:

• Social Security was never meant to be the sole income of retirees. Most elders also rely on investments and savings, the return on which has dropped dramatically. People have lost 30, 40, 50 percent and probably more in some cases, of their retirement nest eggs.

• What happens to the pensions of those whose former employers are filing for bankruptcy?

• Elders are forced to withdraw funds from their IRAs at age 70-1/2. How many are taking a huge financial beating doing so.

• Not all retirees are capable of returning to work, even if there were jobs for them.

• With so many unemployed and more job cuts on the way, what chance do elders have of finding work in a culture as ageist as ours? Age discrimination in the workplace makes it hard for older people to find jobs in the best of economic times.

• There is a quadruple whammy for people nearing retirement: lost jobs, lost 401(k)s, low home prices and few homes selling making planning for the future hard.

• Some people’s homes have been on the market for a year and more, making it impossible for those who need assisted living to make the move.

It’s not that I have answers (well, temporarily suspending the requirement to cash in a portion of IRAs at 70.5 years would be a small start) and there is a lot to juggle for the people who have the power to make changes that might help the economy in general and for individuals. It was heartening yesterday, after the new economic team was introduced, to hear President-elect Obama say that we need:

"...a recovery plan for both Wall Street and Main Street...Our families cannot afford to keep on waiting and hoping for a solution."

True, but so far, the only people directly benefiting from the bailout are giant corporations and their executives who have mostly been allowed to keep their astronomical salaries and bonuses, with help for some midlife people on the way with the new jobs stimulus.

I’m not asking for a bailout especially for elders, but I would like to hear that their unique circumstances are being considered, that some thought is being put to those who have the fewest resources to recoup their losses.

[At The Elder Storytelling Place today, Lia presents a collection of four short, short pieces from her recent trip titled, Berlin Café Stories.]

Comments

"• What happens to the pensions of those whose former employers are filing for bankruptcy?"

In many, if not most cases, pensions do not reside with the former employers. The company in which the pension is funded may go broke; but, bankruptcy by a former employer does not always stop a pension that is already being drawn.

"Elders are forced to withdraw funds from their IRAs at age 72-1/2. How many are taking a huge financial beating doing so."

At least for my age, one is required to start making withdrawals during the year in which one turns age 70 1/2.

I, for one, believe that the whole approach to "bail-outs" has been wrong--that we should use this opportunity to reformulate the economy so that it no longer relies upon excesses of the trivial. What an opportunity to fund the important. Instead of pouring all of the recovery funding into crumbling infrastructure, do away with some of it--invest, instead, in things that make sense for the future, for the long term, such as safe/efficient/attractive mass transit systems. At this stage, there is nothing attractive to me about a growing economy. It just delays the inevitable reckoning that is to come. By bailing everyone out, we are just postponing paying the piper to a later date--at which time, I believe, the payment will be much worse than it would be if we faced it, today.

I am upset that these huge bailouts seem to have no strings attached. The companies receiving the money appear to be able to spend it on bonuses, parties etc.

You have written, again, an excellent piece expressing the elder's unique situation. What about going to the Obama website,
www.barackobama.com and forwarding the article? Or,getting readers who support the view to sign it and then send it? Is that possible? The message has to be put before his team.

I'm very glad the automakers were sent back to the drawing boards. Nope, youse guys don't just get money without a plan. But we need to keep the manufacturing here in the US. My truck was made in Gary Indiana...which is now a wasteland of unemployment and abandoned buildings.

Find a compromise with the unions, make cars we can afford to buy and run, and keep us employed. Bottom line stuff that really is terribly complicated.

The problem is the government does not have the money to solve any of these problems. It is borrowing it. Obama says there will have to be cuts made in government spending as a partial answer to this; so the solution is in targeted spending that genuinely will help the majority. It would help to not demand that elders start pulling funds at 70 1/2 but it won't help those who need that money to pay their bills.

Part of this is that we were basing retirement income assumptions on an expanding economy where investments had at least a 7% (and that was conservative) rate of return. It turns out, it didn't have that. It just looked like it did. Now we are back to where we were 5 years ago with maybe an understanding that unless you pull your money from the market, it can go up and down. It's not real what you see even today with it down.

And much as I love the infrastructure idea of Obama's, how does he guarantee those jobs go to citizens and not to a contractor who is employing Mexicans who work for less and send as much of the money back home as they can? A lot of people don't want to hear about the border problem but a trillion dollar works project with no idea of how to make sure the workers are citizens is going to make the border crossings now look like they were no problem.

All of the problems, and it's not like families with small children don't face plenty of them if they lose their jobs, all of them are not easy fixes. To me, it looks like we are in for some bad times whatever age we are. I am encouraged someone is in charge who cares about the ordinary people and not just to profit certain groups, someone who seems to be intelligent and has picked good people but we have dug a deep hole here. Obama never promised easy fixes during the campaign and he's sure not going to once he actually gets in office

I think you ought to send the last part of this article to Obama's transition team at www.change.gov. They're asking to hear from us and you have articulated this so well. Thanks for all you do, Peg

It is true; we have not yet heard definitive mention of elders from the President-elect. His proposed economic stimulus package ideally will help all Americans, but it is important that elder’s circumstances be addressed, because they are being affected differently than the rest of the population, whether it be putting off retirement or being unable to afford comprehensive health insurance. The Elder Economic Security Initiative at Wider Opportunities for Women is geared toward making sure elders are able to age with dignity by being economically secure. The Elder Economic Security Standard Index measures this economic security by taking in to account an elder’s living expenses: transportation, healthcare, housing, food, and miscellaneous expenses in various geographic areas. It is only with a functioning economic security standard that we can accurately push forth policies that will directly address elders’ needs during this tough economic time.

For more information about the Elder Economic Security Initiative visit http://www.wowonline.org/ourprograms/eesi/eess.asp

You can also post your thoughts about economic security for elders on the Elder Economic Security blog
http://www.wow-eesi.blogspot.com

For those elderly and indigent who have not earned very much in ss benefits, or who have been on disability for a long time, existence depends on gov. stipend, medicare + medicaid and local food banks.

Even with planning and saving, those of us retired, and not poor, and who have had good jobs, find that this economic crisis has betrayed us. Most of us have SS or pension, or both. Our children will not have the pension option. Even if our investments are tanking, many of us do have some stability of income. Our misfortunes are a part of a larger misfortune, and honestly, haven't we contributed to the problem ourselves in previous decades?

The answer is not, I think, to mindlessly buy American, or protest bailouts reflexivly or to blame Bush! We participated in the bubble; we bought things on credit; we borrowed against our house's equity. Now we pay the piper.

If we are very, very lucky, the cure for this late madness will not mortgage our children's future too much. But there are no guarantees.

Sphronia...

I don't mean to be argumentative, but "most people" do not have both Social Security and pensions. What we have in addition to Social Security we saved ourselves.

I don't have any friends who spent lavishly on credit or borrowed against equity, and I certainly didn't during my working years.

And I would be working still and contributing taxes to the economy if not for 20- and 30-something managers who wouldn't hire me, forcing me into retirement after a year of beating my head against the job search wall elders face while going into debt for necessary expenses like food and mortgage payment. I had no unemployment insurance, having worked as a contractor on my last job.

Yes, some people overdid, but let's not lump all elders with the stupid ones. A good many - I suspect a majority of us - were careful with our money all our lives. If we didn't learn the lessons of Great Depression directly, we learned them from our parents who lived through it.

We were careful all our lives, too, and it availed us little.

We're slightly less desperate than most Americans, but only slightly because we follow financial news more and understand the true horrific ramifications of the messes our "leadership" has created. Why are none of these mortgage fraudsters in jail, for starters?

And finally, we can all stop reading those boring money magazine articles droning on about "asset allocation for a secure retirement." "Asset allocation" wouldn't have saved anyone from this meltdown, because most asset classes have been decimated--stocks, homes, and bonds. "Living below your means" and "hoarding cash" worked best, although a year ago any paid financial planner would have laughed at these ideas.

Today, it's our Depression-era moms in heaven who are laughing, and they're right.

A new assisted living facility across the street from our condo in Seattle is standing almost empty. I understood why when I read in the NY Times that elders are getting trapped in homes that are too hard for them to live in because they can't sell them.

Pardon the fractured syntax above. It's been a long day!

I had a bitter chuckle today when I got an announcement in the mail that my medicare cost will go up. I just got a COl raise for my pension that was insignificant, but frankly needed.
The irony is that, in teaching, it was a biggest raise than i got all those years in the profession.
Somehow it seems the gov't gives me a raise in order to charge me more somewhere else. Isn't that a sneaky way to redirect moneys back to the feds? It's kind of "get the money out there" and stick it to 'em somewhere else.
I'm sure the politicians I write to are going to send me fliers about how they got the raise for me. They aren't going to mention the raise in cost in my gov't benefits that I paid into.

P.S. From my comment, above,
"'Elders are forced to withdraw funds from their IRAs at age 72-1/2. How many are taking a huge financial beating doing so.'

"At least for my age, one is required to start making withdrawals during the year in which one turns age 70 1/2."

I should have continued to write that one need not sell securities to withdraw them from one's IRA. Securities may be transferred from an IRA account, into a regular brokerage account--with the required withdrawal's being based on the market value (closing price) at on the last day of the previous year. For those who have not yet made their withdrawal for 2008, this would mean having to withdraw many fewer shares/bonds than if withdrawal requirements were based on current market values. This is potentially a boon for IRA holders who are old enough.

I surely hope Congress enacts the bill being discussed to defer the forced withdrawal of IRA funds at age 70 1/2. Hope you keep tracking action, or lack of action on that bill in case I miss the latest news on it.

For those who had to catch up on retirement savings later in life, being forced to withdraw from an IRA at 70 1/2 can jeopardize accumulation of funds for the future should the individual live another 10, 20 or 30 years. Life spans keep extending. Unexpected health problems later in life might be when those funds would be more needed.

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