No aging crisis — poverty data confirms

Experts disagree on how well prepared Americans are for retirement. Data on income and savings aren’t perfect, and economists differ as to how much they think a household actually needs to fund a comfortable retirement. Some studies find a large retirement-savings gap, while others — including some well-respected work — find that most Americans are doing well in saving for retirement. I’m on the more optimistic side of that debate, but any honest researcher would admit that a legitimate debate on retirement income security exists. Which is why the Washington Post’s lengthy exposition of “The New Reality of Old Age in America” is so disheartening. It has everything that poor journalism exhibits: excessive reliance on anecdotes, the use of misleading and sometimes outright incorrect data, and the one-sided citation of experts. Here is a paragraph where the authors summarize their major conclusions: While some work by choice rather than need, millions of others are entering their golden years with alarmingly fragile finances. Fundamental changes in the U.S. retirement system have shifted responsibility for saving from the employer to the worker, exacerbating the nation’s rich-poor divide. Two recent recessions devastated personal savings. And at a time when 10,000 baby boomers are turning 65 every day, Social Security benefits have lost about a third of their purchasing power since 2000. Nearly all of this is either misleading or simply wrong. The Post reporters focus on a key statistic — that the percentage of older Americans who continue to work is rising — and spin it into a picture of seniors on the edge of financial disaster. The Post illustrates this trend with portraits of low-income retirees seeking to make ends meet by continuing to work, often in difficult jobs. Americans are in fact working longer, which is both to be expected as lifespans increase and to be celebrated as seniors overcome age discrimination, health factors, and the deterioration of their technical skills to extend their work lives and build retirement savings. Moreover, as I pointed out in a 2015 Wall Street Journal op-ed, retirees aren’t all working at Walmart-greeter wages. Older Americans’ labor-force participation rose even as that of younger Americans fell, but older workers maintained their wage levels. So the Post’s whole narrative that working longer is evidence of a retirement crisis is suspect. Worse, most of the Post’s supporting evidence also falls short. Just to start, one might expect that if retirees had “alarmingly fragile finances,” as the Post claims, they would also have a high poverty rate. And yet we see precisely the opposite: Recent research from two Census Bureau economists, C. Adam Bee and Joshua Mitchell, finds that only 6.9 percent of Americans aged 65 and older have incomes below the poverty line. The poverty rate among working-age Americans is roughly double that level; among children, it’s at least triple. If poverty drops as Americans retire, how can that be a sign that our retirement system — which combines Social Security with employer-sponsored retirement plans and personal saving — isn’t working?