Publications by Sheila R. Zedlewski for Retirement Policy

The lackluster economy, eroding traditional pensions, and volatile stock market suggest that baby boomers - those born between 1945 and 1965 - face increasingly uncertain retirements. Our projections show that lower - and moderate-income boomers will continue to rely on Social Security for most of their retirement income. While the projections reflect some good news - women will reap the rewards of working and earning more than previous generations - they also raise alarms. Between 30 and 40 percent of boomers will not have enough income at age 70 to replace 75 percent of their preretirement earnings, a common standard for measuring retirement income adequacy.

In this commentary for New York Times' Room for Debate, Institute fellow Sheila Zedlewski explains that many of the nation's 41 million seniors live in or very near poverty and many have assets mostly tied up in their houses. Policy makers must be ever mindful of that diversity when considering changes in policy that would affect retirement income security.

A surprising number of Americans struggle below and on the fringe of the poverty line during their senior years, but what factors explain this reality? What metrics are best suited for measuring poverty within this population? And how many need nutrition assistance to get by? These and other questions are answered by Sheila R. Zedlewski in the February edition of the Program on Retirement Policy video series.

About one in three Americans age 65 or older lived in low-income families in 2009, including 8.9 percent in poverty. Poverty rates were much higher among those who did not complete high school, lived alone, or had poor health. This data brief reports how poverty and near-poverty rates among older Americans in 2009 varied by demographics, living arrangements, and health status; shows that poverty and near poverty among seniors declined between 2007 and 2009; and describes income sources for poor and non-poor seniors.

While a surprisingly small share of low-income older adults receives government nutrition assistance, the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) and Meals on Wheels (MOW) home delivery program provide important food assistance to them. During 2007 and 2008, about 2 in 10 low-income older adults received assistance from one of these programs; only 1 percent reported getting help from both. Receipt of SNAP declines with age and receipt of MOW rises with age, indicating that these programs tend to complement each other.

Less-advantaged individuals are less likely to have IRAs and 401(k)s, and those who do are more likely to withdraw savings before retirement. About 40 percent of withdrawals can be linked to adverse or investment events, including the onset of poor health, job loss, home purchases, and college expenses. Another 10 percent occur at job change for what may be reasonable expenses. Half of withdrawals can not be attributed to the events we could observe and may represent unnecessary loss of retirement savings. The results show the importance of policies that preserve retirement savings and increase savings for non-retirement events.

Both adverse and investment events can trigger early withdrawals from retirement accounts. About 40 percent of retirement savings losses can be linked to these types of events, which include unemployment, the onset of poor health, primary home purchases, and college expenses. Unfortunately, lower-income families less often have retirement savings and more often tap into these savings when faced with life-changing events. The results call for an integrated savings policy that encourages savings for both pre-retirement and retirement needs.

Older adults often are left out of policy conversations on poverty because many believe that relatively few of them experience economic hardship. Yet an updated measure of poverty indicates that the rate for adults ages 65 and older matches the rate for children. The Economic Recovery package under consideration includes some provisions that would benefit older adults, but more could be done. One-time payments for those receiving welfare and increases in food assistance benefits especially would help some poor older adults. Investments in the job skills of those who want to work should also be considered.

Americans save for retirement by building wealth in personal accounts, home equity, pension plans, retirement accounts and Social Security. We use data from the Survey of Consumer Finances (SCF) and methods to estimate the wealth values of Social Security and pension plans to show how wealth builds over the life cycle. We find that the typical household accrues wealth throughout the life cycle. Households in the bottom income quintile, those that did not complete high school and minorities accumulate much less wealth than their counterparts, and Social Security accounts for a large share of their preretirement wealth.

The slumping stock market, falling housing prices, and weakening economy have serious repercussions for older Americans who are approaching retirement or already retired. Seniors have little time to recoup the values of their homes, 401(k) plans, and individual retirement accounts-all important parts of their retirement nest eggs. More and more older adults are working to bolster their retirement incomes, but the rising unemployment rate limits their prospects. This fact sheet examines the impact of the ongoing economic turmoil on retirement savings, home values, and retirement decisions.

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