4 TAKEAWAYS:

➀ Older folks often fear speaking up. As Siavash Radpour, associate director of ReLab at The New School, explains, the flaws behind the American retirement system affect more than just the possibilities of retirement or the quality it may eventually hold – it affects the day-to-day lives of workers who live within an insecure job market and consistently risk losing their savings. “It’s not just a matter of standards of living in retirement. It’s also affecting the job quality and wage growth of people who are still working,” Radpour told NPF “Living Longer” fellows. If a worker does not have retirement security, then they may feel as if they are not in a position to speak up against unfair working conditions. According to Radpour, about 70% of older workers have reported that they fear losing their job will mean they won’t find another, partially due to age discrimination. As such, the possibility of not finding work and therefore losing savings and retirement planning means that older folks may often stay in physically demanding jobs that risk their physical health. Older folks often face different hurdles – such as poor health or needing to care for sick family members –  that are out of their control, but that may lead to them needing time off that they many are not granted. The environment of fear and consistent risk of losing their jobs trumps older folk’s need to bargain for better wages and better healthcare, particularly during a recession that already brings higher rates of unemployment. [Transcript | Video]

➁ The retirement system is up to the employers, not the employees. Workers who fall under the definition of being “self-employed” can hold a variety of different job titles. Some may be doctors or lawyers who have their own practices, while others may be those working part or full-time low-paying gigs. Those working in the latter may have a difficult time creating a retirement plan since they do get the same benefits as someone who works underneath an employer. According to Radpour, only about 10-15% of laborers in minimum-wage paying jobs have access to a retirement plan. However, according to David John, senior strategic policy advisor at AARP, even those who work within the private sector have a hard time getting access to a plan. 57 million people currently do not have access to a retirement plan using payroll deduction. This largely affects, as John states, young people of color who are liable to be cashed out, to have their small businesses go under or merge into something larger. This leaves many vulnerable communities increasingly liable to lose their retirement savings, having to continue working and saving under the mercy of employers.

➂ Many revert to early withdrawals. “Early withdraws are a problem. People, low earners, are much exposed to risks of job loss and poor health and everything else, to economic shocks, and when they face these shocks, they don’t have emergency savings or access to credit,” Radpour tells fellows. He explains how the concept of lump sums is an issue within retirement planning, and how it affects already vulnerable groups greatly: “Low earners are actually paying more taxes because of the retirement savings. Higher earners are getting the lion’s share. And yeah, of course, they’re exposed to bad advice and high fees. And lump sum withdraws, as John says, is a huge issue.”

➃ There is hope, but more needs to be done. How do we look to the future? John states that one way we can go about solving this is by implementing state-facilitated retirement plans, including an automatic IRA. “Automatic enrollment means that you are part of the plan contributing X percentage of your income into a particular retirement savings vehicle.” This would allow many employers to automatically give their workers a retirement fund, therefore avoiding tax fines and lump sums for those who often choose to use retirement funds for emergency purposes. With three states having implemented this, as John states, half a million people are now able to save for retirement. But with no significant policy changes over the last forty years and a growing older population that is continuously joining the workforce, more needs to be done in order to protect workers.

This program is sponsored by AARP. NPF is solely responsible for the content.