For more and more Americans, retirement is the fiscal equivalent of setting seniors adrift on ice floes.
Half the people approaching retirement age have neither savings nor a retirement pension, according to the Government Accounting Office. The 401(k) retirement savings plans that replaced the once ubiquitous defined benefit pension plans have largely failed in their mission to guarantee the elderly a financially secure old age.
Seniors now account for 12.2 percent of all bankruptcy filings, a rate two or three times higher than a few decades ago.
The constituency of New Hampshire’s congressional delegation, Sens. Jeanne Shaheen and Maggie Hassan and Reps. Annie Kuster and Chris Pappas, is the second oldest in the nation. Some of the state’s seniors have already succumbed to financial distress, others are on the brink.
The new Congress, with Democrats in control of the House, will consider a range of legislation aimed at making old age less perilous, but most changes will come too late to help the baby boomers who are going broke. Do nothing and the percentage of people over age 62 who live in poverty or near poverty will increase by 25 percent by 2045, economist Teresa Ghilarducci warned last summer in Forbes magazine.
What, we wonder, will New Hampshire’s congressional delegation do? What should they do?
First, if they haven’t already done so, they should join the bipartisan effort to pass bills geared to increase the financial security of all Americans. One-third of all employees, some 40 million people, work for employers who do not offer a retirement plan. One bill includes incentives to induce companies to offer a retirement savings plan, though no one expects a return to the good old days of ample, guaranteed monthly checks for life.
The delegation should support efforts, if called for, to shore up the Pension Benefit Guarantee Corp., the agency that makes good, up to a point, on employee pensions when a company goes belly up.
The delegation should join the effort, led by Ohio Congressman Tim Ryan, to change bankruptcy laws, which allow companies, and the hedge funds that buy them, to strip them of assets and use bankruptcy to stick taxpayers with the company’s pension obligations. That’s what Sun Capital Partners, a Florida private equity firm, did when several of its holdings, among them the Friendly’s restaurant chain, went bankrupt.
Since 2013, private equity firms like Sun Capital have dumped $650 billion in pension obligations on the government through the bankruptcy process.
Employees typically agree to lower wages in exchange for more financial security when their working days are over. Pensions are, in a sense, deferred wages. Ryan’s bill would give far higher priority to pension obligations in the bankruptcy process, making them debts that must be paid before most others. That change would protect employees and taxpayers, who are the ultimate guarantor behind the Pension Benefit Guarantee Corp.
Some 10,000 baby boomers retire every day. An increasing number of them are expected to become both old and poor. There’s been a bipartisan call in Congress to convene a commission to consider how to respond to what some fear could soon become a retirement crisis. Members of New Hampshire’s delegation should be on that commission.