Long before the novel coronavirus emerged, millions of older American workers were in real trouble.
Many people in their 50s and 60s work in physically demanding occupations that they can no longer perform, but they cannot afford to retire early. Others are experiencing worsening chronic conditions (like diabetes, arthritis or respiratory issues), acute illness (like a stroke or heart attack), or they leave their jobs to care for an ailing spouse or aging parent.
For those who do manage to keep working until they reach 62 and can begin to collect Social Security, claiming benefits early means a sharply reduced income for the rest of their lives. This is something many cannot afford, especially with meager or zero retirement savings and high healthcare costs. Medicare is not an option until 65, except for the few who have already been on Social Security Disability Income (SSDI) for at least two years; meanwhile, millions living in a number of states face burdensome Medicaid work requirements.
Now, the COVID-19 pandemic sledgehammer that is hitting business owners and their employees across the country poses a potentially lethal blow to these older workers.
First, like millions of others, workers ages 50 and older are losing their jobs (and their health coverage) and are struggling to navigate severely overwhelmed state Unemployment Insurance (UI) systems. Their odds of being rehired when the economy begins to reopen, however, may be lower than those of their younger counterparts.
Second, while every “essential” worker — from health care providers to supermarket cashiers and bus drivers — faces the prospect of contracting COVID-19, that frontline work is much more frightening for older workers; initial studies suggest that the risk grows with age, in part because older people are more likely to have a pre-existing medical condition.
Third, while all who invest in the stock market have seen their savings shrink substantially in the past month, consequences are especially grave for those facing imminent retirement. Among workers who are counting on their 401k savings, the pandemic-induced stock market plunge puts retirement further out of reach, especially for those with deteriorating health or caregiving responsibilities. Employees’ 401k accounts fell by 19 percent on average in the first quarter of 2020, with much larger losses anticipated. Moreover, many employers have suspended matching contributions, as they did in the Great Recession, compounding the damage.
Congress has begun to address some of these realities through the first four rounds of COVID-19 relief legislation, but the overall legislative response is far too little and fails to address systemic problems.
In addition to relief in future bills that are better targeted and broadly accessible, Congress should explore policy solutions that alleviate the ongoing challenges confronting older workers. These will require changes to social insurance, including but not limited to Social Security, Medicare, Medicaid and Unemployment Insurance, along with other programs that recognize older workers’ unique situations.
We, at the National Academy of Social Insurance, recently led a Social Security policy innovations challenge that identified four complementary first steps in this direction. Together, if implemented, they would:
Change the regulations for those claiming early Social Security benefits so they can start and stop benefit receipt as needed or claim partial benefits. This would facilitate gradual retirement, which many prefer, and reduce the lifelong penalty associated with early claiming;
Enact a “bridge benefit” for vulnerable older workers facing the need to claim Social Security early — those encountering long-term joblessness and/or serious health problems. Revenue generated by cutting tax benefits elsewhere in the code could pay for eliminating the penalty these workers now face, providing a critical boost;
Make workplace savings accounts accessible to virtually every worker by requiring all employers to offer them and establishing an opt-out (vs. opt-in) default. Extending this critical benefit to many more low-wage, part-time and “gig” workers would substantially improve retirement equity and reduce pressure on Social Security. Gradual expansion and tax breaks could provide incentives and support for smaller and lower-capacity employers; and
Offer a state-level strategy to further boost retirement security through Supplementary Social Security, which would be modeled on the federal program and managed by individual states that adopt it.
Policymakers should also look at other options the Academy has explored, including a variety of approaches to expand Medicare coverage as well as state-level strategies to address caregiving needs.
For far too long, we have ignored the grim reality facing many older workers. The current crisis offers a unique opportunity to finally change that for the better.
Fay Lomax Cook is the distinguished visiting scholar at the National Academy for Social Insurance and the former director of the Institute for Policy Research at Northwestern University and of the National Science Foundation’s Social, Behavioral and Economic Sciences directorate. Elaine Weiss, lead policy analyst for Income Security at the National Academy of Social Insurance, and she focuses on promoting social justice across her policy work, from education to workers’ compensation.