Retirement planning is an almost impossible challenge for an increasing number of Americans.
The U.S. poverty rate rose to 15.1 percent in 2010, the U.S. Census Bureau reported today. Those receiving Social Security should look at that number and feel blessed. The census calculates that Social Security is keeping another 20 million people out of poverty in their retirement. And for those older than 65, there is also Medicare.
"The elderly are relatively insulated," says Sheldon Danziger, professor of public policy at the University of Michigan, specializing in research on trends in poverty and inequality.
"By 2014, if health care reform (The Affordable Care Act) isn't overturned, people who retire early or who are laid off will have access to subsidized medical care," which will protect still more people from falling into poverty, he says.
"The difficulty is being laid off at age 58 without access to Social Security until you are 62 and Medicare until you are 65. That is a scary situation to be in," he says.
Danziger believes out that the U.S. has poverty rates that are higher than those in Canada and Northern European countries for two reasons:
- For 30 years, the labor market has generated declining real wage rates for many Americans, especially for men who once worked in well-paying construction and manufacturing jobs. According to the census figures, the median annual income for a male full-time, year-round worker in 2010 was $47,715. That's only slightly more than it was in 1973, when he would have earned $47,550, in 2010 dollars.
- Our government labor market and social policies do less than those in other countries to raise the wages of workers during good economic times and to help the unemployed during recessions. "Americans are funny people. They like to think of themselves as compassionate, but they really aren't. Compared to other countries, they are mean-spirited about the poor, assuming that anybody who isn't working is choosing not to work," Danziger says.