Today's Seniors Do Not Have Better Retirement Benefits Than Prior Generations [View all]
A NYT article on the dwindling size of the middle class noted that seniors are more likely to be middle class than in the past. It told readers:
"Today’s seniors have better retirement benefits than previous generations. Also, older Americans are increasingly working past traditional retirement age."
In fact, seniors on average almost certainly have worse retirement benefits. The increase in the normal retirement age from 65 to 66 is equiavlent to a 6 percent cut in Social Security benefits.
In addition, changes in the methodology used for calculating the consumer price index reduced the size of the annual cost-of-living (COLA) adjustment by 0.3-0.5 percentage points compared to the increases in the early and mid-1990s. (This means that for the same actual rate of inflation, seniors would see a COLA that is 0.3-0.5 percentage points less than what they would have received in the early and mid-1990s.)
In addition, today's seniors are less likely to have a defined benefit pension, as these are dwindling rapidly. Defined contribution pensions have not come close to making up the loss.
Seniors also are far less likely to have retiree health insurance to cover non-Medicare expenses. Medicare has also become less generous in many respects, although the addition of the Medicare drug benefits (Part D) has been a big help to seniors.
The main reason seniors have more income is that they are working later in life. This is a positive insofar as it is the result of the voluntary decision of people in good health who enjoy their work. However in many cases, this is almost certainly not true. Many older workers are staying in the workforce because they have no other way to make ends meet.
http://www.cepr.net/index.php/blogs/beat-the-press/todays-seniors-do-not-have-better-retirement-benefits-than-prior-generations
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