Economic Policy Institute Says Workers Over 45 Hit Hardest

A news brief issued today by the Economic Policy Institute (EPI) argues that the current recession has taken an unusually high toll on workers over age 45, many of whom “say their job search is fruitless.” As one of the organizations co-sponsoring the Retirement USA initiative, EPI is particularly focused on concerns of older workers.

In an April 28 post, I argue as well for the need to re-think the retirement system in the U.S., based on the big question marks, raised by that the performance of equities markets over the past 10 years, over whether we can still think of the 401(k) model as a viable retirement solution for the average worker. My post also suggests that increasing the expected retirement age may also need to be a factor in an overhauled system, with the caveat that allowances may need to be made for the fact that, in spite of longer life expectancies, the health profile of Americans past age 60 remains highly variable.

Today’s brief from the EPI, however, references a briefing paper by economist Monique Morrissey that raises valid counterpoints on the retirement age issue, at least in the context of the existing Social Security system, favoring instead an increase to the rate cap on income subject to the Social Security tax.

According to a press release announcing Morrissey’s paper, “Most of the increase in life expectancy in recent decades has been among higher-income workers. Raising the Social Security retirement age would be especially hard on lower-income and minority workers, given large and growing disparities in life expectancy and poor health and/or job prospects.”

The point is well taken and, along with the issue of the current recession impacting older workers disproportionately, makes me recall a comment I heard a few weeks ago from a guest on Bob Brinker’s Moneytalk radio program that the administration should even consider allowing displaced workers as young as 55 to begin collecting Social Security benefits, based on how poor their job prospects may be in the current economy.

However, if we buy into the concept that the 401(k) model is not delivering on its early promises as a viable model, we can’t afford to lose site of the likelihood that tweaking Social Security will not be the long-term answer. Sphere: Related Content