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Protecting Against Poverty-Stricken Old Age

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Richard T. Moore
August 24, 2018

When President Franklin D. Roosevelt signed the Social Security Act into law on August 14, 1935, he ushered in a new program that, among other goals, was to protect American senior citizens from what he called “poverty-stricken old age.” This year, approximately 63 million Americans will receive about one trillion dollars in benefits. It has become the economic foundation for most seniors.

There have been several significant changes to social security over the 80-plus years aiding seniors and the disabled. Cost of living adjustments that once had to wait for congressional action now are automatic and are based on the annual increase in consumer prices. This is intended to help maintain the buying power of Social Security dollars. However, the percent amount fluctuates with the variations in consumer prices. Prior to cost of living adjustments becoming automatic based on a 1972 federal law, congressionally enacted COLA’s most often occurred in election years, according to John Palmer, a Syracuse University professor and former public trustee of the Medicare and Social Security programs.

The eligibility age has also changed gradually increasing beyond 65 for full benefits. Other changes include elimination of an earnings test, taxation of benefits, spousal and child payments and disability payments. For a full explanation, Emily Brandon’s article in the August 10, 2015 US News and World Report offers a detailed explanation.

The “Burden” of Aging

As America’s population is aging. Predictions regarding the impact of a “graying” America cover a wide range of economic, political and social outcomes. Maureen Mackey, writing in the Fiscal Times noted, along with other experts, that “we’re living longer and healthier lives, but an increasingly older population means an increasing pull on government entitlement programs. Social Security, Medicare, long-term care, public pensions and other financial-support programs are heavily burdened systems that can bring down the economy.” The rising cost of health care for seniors, the economic burden of skilled nursing facilities—many offering inadequate care amidst workforce shortages—and the lack of sufficient funding of public pension programs also contribute to a feeling of impending crisis.

Economics Professor Andrew Scott, in a June 2018 essay for The Milken Institute Center for the Future of Aging notes, “this aging of the population is driven by two factors. The first is declining birth rates, which means older generations are large compared to younger generations, and so, on average, the population becomes older. This is especially true in the U.S. where baby boomers are such a large cohort. The second reason is that people are living longer. A child born in the U.S. today has a very realistic chance of living beyond 100 and needs to plan accordingly.”

The Longevity Dividend

Scott explained, “it isn’t just that people are, on average, living longer. It’s also that they are on average healthier and more productive for longer. Seizing this advantage holds out the prospect of a “longevity dividend.” If people are healthier and productive for longer, they can work longer, consume more and in general be a boost to the economy.”

If America is to prevent the calamity suggested by Mackey and others, and reap the benefits of the “longevity dividend,” many experts have suggested that changes will be needed in governmental policy and business practices. For example, those seniors who want or need to work beyond the Social Security eligibility age must currently pay into the Social Security Trust Fund, but do not receive any benefit from these additional contributions when they fully retire.

Advantages of Older Workers

Corporations should recognize the benefits of hiring and retaining older workers with their skills, experience and stability rather than reject employment applications from seniors. In a near “full-employment economy” encouraging experienced employees to work beyond traditional retirement age may become a necessity. Business leaders should consider allowing different work schedules, remote worksites and other policies that meet the needs of an older workforce. A landmark report commissioned by the American Association of Retired Persons (AARP) in 2005, and updated in 2015, makes a strong business case for employing workers over age fifty..

Senior Housing Options

Rather than requiring older workers to travel already crowded highways to a central office or factory, the pre-industrial revolution concept of “cottage industries,” might be more attractive and, with the benefits of technology, easier to manage. It also reduces stress and cost of commuting.

At least one concept popularized by industrialist Samuel Slater at the birth of America’s Industrial Revolution might be company housing modelled on today’s assisted living industry. Assisted living, a concept developed in the last thirty years, offers independence, high quality living, socialization, along with culinary, health/wellness and house-keeping services. Currently, assisted living is, for the most part, beyond the economic limits for many seniors. Independent living, for those who don’t need the services found in assisted living, is also gaining in popularity, but is beyond the reach of seniors who worked in low-wage industries. However, assisted living and independent living as company or university housing for older workers could open new, affordable housing opportunities.

Author: Richard T. Moore is a past president of the Massachusetts Assisted Living Association and has served in both elective and appointed public office at local, state, and federal levels of government. He served for nearly two decades each in the Massachusetts House and Senate, as well as being chosen as President of the National Conference of State Legislatures. He also served in Washington, DC as Associate Director of FEMA in the Clinton Administration. A former college administrator and adjunct assistant professor of government at Bentley University and Bridgewater State University, Mr. Moore is a long-time member of ASPA serving terms as Massachusetts Chapter President and National Council member.

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