The retirement industry released some news this week I'd like to share with you.
First, the ugly news
Nearly half of elderly Americans are "economically vulnerable," meaning they're at risk of significant material hardship if they suffer one lousy break, such as an unexpected medical expense. Those age 80 and up are at higher risk than those of ages 65 to 79.
Women, at 53 percent, are more vulnerable than men (42 percent). Sixty-four percent of African Americans and 70 percent of Hispanics are vulnerable, compared to 44 percent of Caucasians.
This news comes courtesy of the Economic Policy Institute, which is using the stats to argue against Medicare cost-sharing. That's House Budget Committee Chairman Paul Ryan's idea to convert the Medicare program to a voucher system. Such a system would eventually demand a higher share of older people's income to pay for medical care, says EPI. And they can't afford it.
The EPI is also against tying Social Security's cost-of-living adjustment, or COLA, to a chained consumer price index. The chained CPI in effect cuts benefits because the COLA increases would not be as generous as the consumer price index for wage earners, or CPI-W. That's the measure that's currently used, and in my opinion, understates the true inflation rate as it is.
How can so many older people be economically vulnerable? The EPI uses alternative measures of poverty that consider such things as medical costs, so it's different from the more stringent federal poverty level. Its methodology is explained in the report.
The bad news
Misinformation is always bad, particularly when the source should be reliable. At the recent Plansponsor national conference, Joe Ready, director at Wells Fargo Institutional Retirement and Trust, dispelled some myths, according to an article from Plansponsor.com.
Ready blamed the retirement industry itself for perpetrating the myths. Among the myths discussed were the following:
Myth No. 1: 401(k)s are for the benefit of the highly paid.
Fact: They're mainly benefiting the middle class, with 80 percent of participants earning less than $100,000, and 40 percent earning less than $50,000, according to the article by Rebecca Moore.
Myth No. 2: Only 50 percent of workers have access to a retirement plan.
Fact: That figure includes seasonal and part-time employees. Among full-time workers, 80 percent have access to workplace plans.
My 2 cents: Everyone has access to individual retirement accounts, or IRAs.
The good news
Three federal agencies banded together to create a new brochure that could come in very handy, particularly for those who are approaching retirement.
Created by the Department of Labor, the Social Security Administration and the Centers for Medicare & Medicaid Services, the Retirement Toolkit offers information about deadlines and actions you must take to better prepare for retirement. It includes a timeline for retirement planning and explanations of how to enroll in the various parts of Medicare. Because the information is all in one place, is written in easy-to-understand English and includes links to other information sources, it's good reference material.
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Barbara Whelehan is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It is available at Amazon, Barnes & Noble, iBookstore and other e-book retailers.