In its Report to the Chairman, Subcommittee on Primary Health and Aging, U.S. Senate Committee on Health, Education, Labor and Pensions, the GAO said Social Security likely helped keep at least some eligible long-term unemployed older adults from falling into poverty. Workers who left the workforce prematurely could face insufficient income at older ages because they may have reduced monthly Social Security benefits due to starting them at age 62 and less savings than may be needed over a longer period of time.
The report noted that more of today’s older retirees are able to rely on lifetime retirement income from defined benefit plans than will in the future. The shift from defined benefit to defined contribution pension plans will make future retirees more dependent on their own choices about how much to save, how to invest those savings, at what age to retire, and how to draw upon those savings; and more vulnerable to financial market volatility.
The GAO’s analysis found that since 2007, unemployment rates doubled and remained higher than before the recession for workers 55 and older. While these rates were not as high as for workers in younger age groups, the median duration of unemployment is higher for older workers, indicating that older workers have a harder time finding other employment after losing a job.
The proportion of older workers employed part-time who would prefer full-time work rose sharply. Since 2007, many older adults have seen decreases in their income and net worth. Median household income fell by 6% for adults 55-64, but increased by 5% for adults 65 and older. Household net worth fell for all older adults during the recession, while poverty rates increased for those ages 55-64. Medical costs continued to rise faster than other costs.
According to the report, the purchasing power of Social Security benefits was maintained with cost-of-living adjustments and, for those receiving benefits in 2009,increased with a one-time $250 Recovery Act payment in 2009.The report is at http://www.gao.gov/new.items/d1276.pdf.