As chairman of the Senate Health, Education, Labor and Pensions Committee, Sen. Bernie Sanders (I-Vt.) has paid special attention to retirement security issues.
The self-declared democratic socialist has a certain reputation. You may not be where Sanders is politically, but you respect that he speaks the truth as he sees it without fear or favor. And yet, Sanders’s statements about retirement savings in the U.S., buttressed by a recent report released by his committee staff, are so inaccurate as to be irresponsible.
In a recent op-ed written for Fox News, Sanders made one of his favorite claims: “In America today, almost 45 percent of older Americans between the ages of 55 and 64 have no savings at all and no idea how they will be able to retire with any shred of dignity or respect.” Sanders attributes this figure to the Government Accountability Office (GAO), which calculated it from the Federal Reserve’s Survey of Consumer Finances. So it’s rock solid, right?
In fact, not at all. What Sanders calls “retirement savings” are only balances in retirement accounts such as IRAs and 401(k)s. But there are many other ways to save.
What about state and local government employees who have generous traditional pensions but may not be offered a retirement account? They’re without savings, Sanders says, despite having accrued $9.3 trillion in future pension benefits. This is indeed ironic, given that Sanders’ op-ed was released in conjunction with a committee hearing focused on expanding Americans’ access to traditional pensions, which Sanders’ oft-cited statistic does not consider to be “retirement savings”
And what about people who save for retirement outside of a formal retirement plan? Another Fed dataset, the Survey of Household Economics and Decisionmaking, asks specifically about these other sources of retirement savings.
Among 55 to 64-year-olds in 2022, 58 percent reported having retirement savings in an ordinary taxable investment or savings account, 14 percent owned real estate that would generate income in retirement and 19 percent owned a small business that could generate retirement income. In total, 90 percent of Americans aged 55 to 64 in 2022 told the Fed they had some form of retirement savings, dwarfing the 55 percent figure Sanders cites.
But it goes on, with Sanders’ claiming that Americans have “no idea how they will be able to retire with any shred of dignity or respect.” The Fed’s Survey of Household Economics and Decisionmaking sheds light on the claim as well.
Among households aged 65 in 2022, just 4 percent described their financial situation as “finding it hard to get by,” with another 13 percent “just getting by.” Eighty-two percent said they were “doing okay” or “living comfortably,” up from 62 percent when the survey began in 2013. Moreover, seniors report much higher financial security than younger Americans.
But it keeps going: according to the Organization for Economic Cooperation and Development, Sanders says, the United States has “one of the highest rates of senior poverty compared to other wealthy nations.” Twenty-three percent of U.S. seniors live in poverty, Sanders claims.
That would be news to the U.S. Census Bureau, which in a 2023 analysis using IRS data found just 6.4 percent of U.S. seniors with income below the federal poverty threshold. The OECD figures Sanders cites are not measures of poverty as commonly understood but of inequality. The OECD sets the poverty threshold differently for each country, at anything less than half that country’s median disposable income. And yes, the U.S. has greater income inequality than most developed countries.
But the OECD finds that the typical U.S. senior has the second-highest disposable income in the world, trailing just the tax-haven city-state of Luxembourg. Our median senior’s income is 50 percent higher than Denmark, 29 percent above Germany and double that of Japan. Does it make sense that to avoid “poverty” a U.S. senior needs twice the real income of a Japanese retiree?
In reality, Census Bureau researchers have found dramatic reductions in elderly poverty even since 1990, with the share of seniors with sub-poverty level incomes falling from 9.7 percent in 1990 to just 6.4 percent in 2018.
Retirement is a serious topic for ordinary Americans trying to save enough and for federal policymakers thinking about how to fix Social Security and improve private-sector retirement plans. Americans deserve a serious analysis of the state of retirement income security. Sen. Bernie Sanders does not provide that.
Andrew G. Biggs is a senior fellow at the American Enterprise Institute.
On retirement, Sanders delivers a litany of misrepresentation
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22.03.2024
As chairman of the Senate Health, Education, Labor and Pensions Committee, Sen. Bernie Sanders (I-Vt.) has paid special attention to retirement security issues.
The self-declared democratic socialist has a certain reputation. You may not be where Sanders is politically, but you respect that he speaks the truth as he sees it without fear or favor. And yet, Sanders’s statements about retirement savings in the U.S., buttressed by a recent report released by his committee staff, are so inaccurate as to be irresponsible.
In a recent op-ed written for Fox News, Sanders made one of his favorite claims: “In America today, almost 45 percent of older Americans between the ages of 55 and 64 have no savings at all and no idea how they will be able to retire with any shred of dignity or respect.” Sanders attributes this figure to the Government Accountability Office (GAO), which calculated it from the Federal Reserve’s Survey of Consumer Finances. So it’s rock solid, right?
In fact, not at all. What Sanders calls “retirement savings” are only balances in retirement accounts such as IRAs and 401(k)s. But there are many other ways to save.
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