By Charley James
A new study published this week has revealed a worrying trend in the United States: nearly half of the elderly population have less than $10,000 in financial assets when they die. This means that many seniors lack the ability to withstand financial shocks, such as medical treatments or other unexpected costs, without relying on Social Security and Medicare as their only means of support.
The findings, co-authored by James Poterba of MIT, Dartmouth’s Steven Venti and David A. Wise of Harvard, are part of a new book titled Investigations in the Economics of Aging. Dr. Poterba, the Mitsui Professor of Economics at MIT, cautions that “there are substantial groups that have basically no financial cushion as they are reaching their latest years.”
The reason that people over 65 are coping reasonably well with the Lesser Depression is because Social Security provides a financial floor, a benefit that working Americans pay for through the FICA payroll deduction during their working years. Medicare premiums are also paid with a small deduction from Social Security.
Mitt Romney and other Republicans have referred to Social Security and Medicare as “entitlements”, implying a hand out, when in fact retirees have funded the benefit they now receive throughout their working lives. Without Social Security and Medicare, many of the nation’s elderly would be destitute, sick and homeless.
The Republican Party has proposed cutting benefits, privatizing the entire plan and doing away with Medicare. This would send retirees back to a time when the elderly often lived an impoverished life. The New Yorker recently published a profile on Rep. Paul Ryan (R-Wi) which quotes him as saying, “Only by taking responsibility for oneself … can one ever be free and only a free person can make responsible choices – between right and wrong, saving and spending, giving or taking.”
This view is shared by most conservatives, even if it means more people are left impoverished and living on the street through no fault of their own. It is clear that Social Security and Medicare provide an invaluable safety net for the elderly, allowing them to live decently in their later years. To take this away from retirees is to condemn them to a life of poverty and destitution.
