The COVID-19 recession is likely to cost the jobs of 22 percent of middle income workers age 50 to 60 making between $48,000 to $137,730 and the jobs of 15 percent of their peers earning above that, according to a report released today.
The recession will force an additional 1.1 million of these middle income job holders and 360,000 higher income tholder workers into a substandard standard of living when they retire, says the study by the New School of Social Research’s Retirement Equity Lab (ReLab).
The report calls the increase bleak prospects of many of the near elderly for retirement “defacto poverty.”
While the income threshold for defacto poverty is double that of the official poverty rate, ReLab Director Teresa Ghilarducci stresses the elderly face higher health care costs than the rest of the population and larger expenses in general than a great number of Americans because the elderly retired often live alone.
Ghilarducci says this recession is likely to hit older workers harder than economic downturns of the past because the widely publicized larger vulnerability of the aged to COVID-19 is going to increase age discrimination in hiring.
She adds older workers are usually the first to get laid off and the last to be re-hired.
The study projects the recession will drop the income the middle-class older workers could expect to have in retirement to 52 percent of their last working-life annual earnings than the 62 percent estimated before the recession and to 43 percent from 53 for the higher income.
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The report says 41 percent of the middle income at age 62 have no retirement savings.
For those of that age who do, the average is expected to be $74,000 after the recession compared to $173,000 for the upper income.
House with middle incomes account for 44 percent of 62-year-old Americans with those with higher incomes coming in at 6 percent of the total.
To increase the well-being of older workers when they retire, ReLab is calling for Congress to increase and expand unemployment benefits for them, expand Social Security, discourage early retirement account withdrawals, create a public option retirement plan in the form of Guaranteed Retirement Accounts.
GRAs, the report explains, would be universal, individual accounts funded by employer and employee contributions throughout a worker’s career along with a refundable tax credit.
Source: forbes.com