40% of Older Americans Will Experience Downward Mobility

ReLab's new report, "40% of Older Workers and Their Spouses Will Experience Downward Mobility in Retirement," finds that inadequate retirement accounts will cause 8.5 million middle-class older workers and their spouses to be downwardly mobile in retirement, falling into poverty or near poverty in their old age.

Top 5 Cities Where Older Workers' Wages Fell and Younger Workers' Wages Soared

January 2018 Unemployment Report for Workers Over 55

President Trump in his State of the Union address highlighted the country’s falling unemployment and rising wages. Today's Bureau of Labor Statistics' report of a 3.0% unemployment rate for workers age 55 and older in January, a decrease of 0.3 percentage points from December, does not contradict the President’s view. However, while the headline unemployment rate is at an historic low and hourly wages did nudge up, these national numbers hide drastic geographic differences in the labor market. We find that cities with dynamic labor markets for prime-age workers are not necessarily welcoming to older workers.

Don’t Stop Saving: Trump’s State of Union Gloats are Temporary

This is a repost from Forbes.

President Trump‘s record-long State of the Union address offered two short points relevant to ordinary people‘s finances, including retirement accounts and after-tax income. President Trump said, “The stock market has smashed one record after another, gaining $8 trillion in value. That is great news for Americans’ 401(k), retirement, pension, and college savings accounts.”  He also said, “A typical family of four making $75,000 will see their tax bill reduced by $2,000 — slashing their tax bill in half.”

Since both phenomena are temporary, I worry people will treat them as permanent changes - to their detriment. People will pull money from their 401(k), stop saving, and spend more.

People lost more than they thought in the last recession. Stable older workers with 401(k)s – those who did everything right – lost 25% of the value of their retirement accounts after one year. On average, four months after the September 2008 crash, retirement accounts lost 37% of their value. The recession devastated older workers approaching retirement because their accounts never had a chance to recover.

Most of the Republican cuts to personal income tax go to the top 1%.  But it is true that many will see a temporary tax cut starting February 2018, as Trump stated. However, the individual tax cuts are temporary, while the corporate tax cuts are permanent.

The takeaways? First, do not fall prey to the temptation to take money out of 401(k) accounts. Don’t forget the morbid joke about the Great Recession - that it turned Americans’ 401(k)s into 201(k)s. Second, resist the idea that a short-term decrease in taxes allows for more spending.

Third, keep saving and brace yourself for the next recession. 

With Hidden Unemployed, 3.2 Million Older Workers Trapped in Unemployment

December 2017 Unemployment Report for Workers Over 55

The Bureau of Labor Statistics reported an unemployment rate of 3.3% for workers age 55 and older for the month of December, an increase of 0.2 percentage points from November. While this headline unemployment rate is still at historic lows, it only counts as unemployed those who actively sought employment in the last month.

State Retirement Reform: Lifting Up Best Practices

While heralding the bipartisan effort and innovation of active states, ReLab's new report, "State Retirement Reform: Lifting Up Best Practices," seeks to broaden options for future legislation by raising up best practices from the movement's early leaders.

This report demonstrates:

  • State-level retirement reform efforts continue to emerge at a breathtaking pace, with 22 states introducing legislation since Trump’s inauguration.
  • State policymakers are modeling legislation on bills moving forward in other states, following four policy vehicles.
  • The comprehensive hybrid model that combines marketplaces, open MEPs, and auto-IRAs provides the best option to increase access to coverage.
  • State-level programs point toward comprehensive reform in Guaranteed Retirement Accounts.