The day you turn 50 you get that dreaded over-the-hill invitation–but from whom? Ah–from none other than your friendly folks over at AARP, better known as the 800 pound gorilla in the room. It is a group that conservatives love to hate almost as much as the NEA–both of them, and PBS. It’s a powerful group and it has 37 million members and $1.3 billion budget which is a force to be reckoned with.
You can join AARP the day you turn 50. Why so early, most people don’t retire at 50. Well, the reasoning is, you have to get ready to retire at 50. Actually, it is probably a good idea to start getting ready for retirement at age 25 but of course, no one believes it. At 25, you are immortal. (even more reason to prepare, looking at things from the other end of the barrel but you can’t tell young people anything.)
Conservative groups are always trumpeting warnings about the AARP picking the pockets of senior citizens. Ihaven’t figured out quite how they do that. The dues are something like $8 a year. That isn’t going to break the bank. They do lease their name for big bucks to put on medicare gap insurance as well as Rx Medicare D. On the other hand, those various coverages are also some of the best out there. Quality coverage is hardly taking advantage.
Meanwhile, the AARP is weighing in on the debt debate and it will be a force to be reckoned with. According to the Richmond Times Dispatch:
Republicans say scaling back Social Security and Medicare, the largest drivers of future government deficits, is necessary. President Barack Obama has previously been open to benefit cuts.
But for lawmakers who would have to vote for such changes, AARP’s 37 million members and $1.3 billion budget are a force to be reckoned with. Over the past eight months, AARP has sponsored a series of candidate debates, run television ads, circulated questionnaires and held more than 4,000 meetings across the country to mobilize its legion of supporters to oppose any cuts.
Under the slogan “You’ve earned a say,” the group has been building opposition to entitlement changes. A recent poll by the organization found that 70 percent of Americans age 50 and older think Medicare and Social Security shouldn’t be part of the fiscal debate.
AARP opposes raising the age for Medicare eligibility on the grounds that it would increase costs for younger seniors while driving up premium costs for older ones. The group opposes efforts to shrink Social Security cost-of-living increases, which it says would cost older seniors thousands of dollars a year in benefits.
AARP’s critics say it is looking out for current retirees at the expense of future generations.
“We’ve been stealing money from our children, and one of the main reasons that we’ve been unable to stop is that AARP is so opposed to any change to the entitlement programs and they’re politically powerful,” said Kevin A. Hassett, an economist at the American Enterprise Institute.
But AARP argues that it is protecting benefits vital to current retirees and younger Americans alike. With the demise of guaranteed pensions in the workplace and the inability of many workers to save enough for retirement, Social Security and Medicare are increasingly indispensable.
“You have people in their 40s and 50s who are cascading toward a terrible retirement,” said Eric Kingson, a Syracuse University professor who co-chairs Strengthen Social Security, a coalition that has joined AARP, organized labor and others in opposing any benefit cuts in the program.
AARP and others say the recent economic downturn has made it even more urgent to protect entitlements. Households with adults approaching retirement have median retirement savings of $120,000, about the same as 2007, according to the Center for Retirement Research at Boston College. But balances for younger workers have shrunk, meaning that more that half of all Americans could see their standard of living decline once they retire.
In 25 years, spending on Medicare and Medicaid is projected by the Congressional Budget Office to equal 10 percent of the economy — double the current percentage. Over the same period, Social Security spending is expected to rise from 5 percent of the size of the economy to 6 percent, mainly as a result of the retirement of baby boomers.
The “stealing from our children” mantra is getting old. I have heard it my entire life. The biggest steal of all was the debt accumulation from WWII. Of course my generation is paying for it, as did my parents’ generation. My children will pay for it also. Freedom isn’t always free. Look at the choices. I was always told ‘Sprechen Sie Deutsch?’ in my home when I whined about such things. War isn’t free, despite what the Bush administration thought. Unlike WWII, the two wars the first part of the century were not offset with War Bonds purchases or anything that helped offset their cost.
The 401K has been the corporate rip-off of the century. Most people simply can’t save enough to provide for a secure retirement. Often employers don’t even have a matching program. The 403B, the non-profit cousin rip off plan, often has fees attached to it that eat away wealthy building over the years. More and more people have had to use part of their 401K to help them through hardship, especially in the crash of 2008, Those people payed dearly to cash in also. Often the new expression becomes ‘What 401K?’ Those who still have their 401K often get a real lesson in reality when they find out that their 401K is only worth 76% of its face value. Yes, that’s why they are called “tax deferred plans.” All that money sitting there smiling at you has not been taxed. Reality bites. Think you have $100,000 saved up. No you don’t. You only have $76,000.
Any adjustments on retirement are going to have to be eased in long before those turning 50 would be affected. A change in retirement isn’t just something you sucker punch people with. Retirement planning begins long before the day you don’t receive that gold watch.
Good on AARP for looking out for current retirees. You don’t start chipping away at retirement benefits on people who simply no longer have options. Most retirees have their working history long behind them. All the lavish retirees you see in Florida commercials are window dressing. There is a whole, invisible class of people out there who are making up the 47% Mitt Romney turned up his nose at. Rest assured that AARP will be watching out for them. Mitt’s folks probably aren’t even members and it isn’t because they can’t afford the $8 annual dues.
It used to be a lot easier to target senior benefits as a place to start the ‘stop spending’ mantra. Now seniors have that old ‘safety in numbers’ working for them since the Baby Boomers are coming of age. As a Baby Boomer, I hope that name brings the kind of dread that ‘Vikings’ used to bring a millenium ago. Attila the Baby Boomer works also. For the past 2 years we have all heard all the BS and blather about taking away pensions, and all the different ways to whittle away at Social Security and Medicare. Politicians might want to rethink all that. There is a new Sheriff in town now.
“It is the 900-pound gorilla,” said Frederick R. Lynch, a Claremont McKenna College professor who wrote a book about the organization. “All AARP has to do is whisper.”
We old geezers, the demographic that AARP represents, are about the only constituency left in the Republican Party. It appears that a certain party has yet to learn a lesson.
People were sold a bill of goods during the Greedy Eighties – that private retirement accounts could out perform common, fairly reliable guaranteed pensions. Too many folks didn’t fight for the old standard but figured they could make more and make it quickly by being in control themselves – sometimes with matching funds from their employer. Greed was good. But it didn’t pay off for those who thought that stocks and house prices only went up.
I think that many people are going to have to be bailed out by some government program in twenty or thirty years when they can no longer work and have little saved. It’s either that or join the crowd under the bridge.
Morning censored….and it isn’t people who were careless and irresponsible either….it was people who really thought they were doing the right thing. They played with the rules they had at the time.
I was lucky. I worked for a company that had a pension and a retirement account program with good matching. Most people weren’t that lucky.
People were sold a bill of goods. Additionally, a lot of the retirement accounts have an annuity fee of 1% attached to them. Over the years, that costs some bucks. Most retirement accounts like that don’t annuitize well.
I will say that retirement accounts do help you reduce your income while working. However, retirement taxes really clobber you when you get your money out. Higher tax rates and having more money coming in ……someone lied about the ultimate tax advantage.
I heard the 401k was originally set up for rich people to hide their money for a while…not the commoners.
Let’s not foreget that 401K’s also funneled more money into the stock market so rich people’s portfolios would increase in value and the wall street boys would get bigger commissions and bonuses.
Oh yea and some of the managers had quite a scam going. Mr. Howler moved companies and he had the same worthless slob handling the 401k program (outside of the company). This dude had the entire small business market sewn up. This guy was totally worthless in every sense of the word. I bet he made a fortune off of sales people who had limited options.
The 80s was the decade when globalization began to create downward pressure on wages and pensions. In order to survive against cheap products from Korea and Japan, companies moved from defined benefits to defined contributions. It was not really pleasant, but it preserved jobs at the time. No one that I knew believed that private retirement funds were better than pensions.
Even today, labor unions do not seem to understand that unreasonable demands can put a company out of business and therefore cost jobs, e.g. Hostess.
They understand when the CEO of the company is making over a million a year and they are making $40k/.
Kelly, why do you defend these companies with a CEO with these huge salaries.
Any time I have a proxy vote I always vote against going with the board of directors over CEO salaries. They make too much.
Pensions needed to be redefined, rather than eliminated. Any company who can pay a CXO over a million a year can have a pension plan. Cutting out health care after retirement is a good way to save costs. Also shared pension plan is a good way cut company costs.
It was just a way for companies to go on the cheap and save money so they could pay their CXOs more. (and create a nice golden parachute for them)
@kelly_3406
Yes, globalization was a contributing factor, but it was a decade known for flash – big money, big hair, big shoulder pads, big stock portfolios, big houses, flashy cars, and flashier jewelry. Oh, and being a “professional”. Everyone was a “professional” of some sort.
At a point when this nation should have been worried about global competition, it’s attention was instead turned to a transitory “living beyond one’s means”. Some people still held onto their bucks and even substantially increased them by learning how to move money around, but the average Joe or Jane came out of that decade less prepared for retirement even when they thought they were set.
It was a decade that many should have remembered when easy mortgages appeared about ten years ago and made money easily available.
And where do you think that the pension funds create the money to pay back?
The pensions are invested in the same stock market that the 401k’s invest in. And the pensions were underfunded and overgenerous in many respects and so are now in negative numbers.
Pensions are not all that great either.
Pensions are great. What’s wrong with pensions?
Pensions are guaranteed for life and you can designate them for your spouse. 401k has restrictions on how much you can dump in a year. Its that defined benefit vs defined contribution thingie.
Also, most pensions slam gigundo amounts of money into hedge funds that just can do things the rest of us commoners can’t do.
Most 401ks are restricted into a few choices. You usually don’t have an open market ike you might have with an IRA. Additionally, the people handling a pensions financial affairs are generally financial experts. Who oversees a 401k program ? Usually your human resource person. Some companies have a ‘rep’ to interface with. The one Mr. H had (regardless of who he worked for) was this arrogant foreigner who didn’t like dealing with people. He hated wives even worse. He also didnt know jack sh!t about investments.
Most 401K plans are definitely inferior to even a mediocre pension plan.
I will agree that pension funds took the same hits everyone else did furing the crash. That is one reason VRS has had to do a giant make-over. The other reason is that the General Assembly will never vote to fund at what the pension directors advise. Also, (and one more thing) the fund was used as an ATM by the state of Virginia. I still maintain that it was illegal to do so.
@Moon-howler
Pensions are great? How about those pensions that are broke in New Jersey, California, Illinois, and Wisconsin? That’s what’s causing the conflict with state gov’ts and public unions.
I don’t think that ANY retirement plan is good right now because we are being hit with a defacto inflation rate MUCH higher than what the gov’t is saying it is.
The stock market is inflated. The dollar, per the BLS, has lost 65% of its buying power since 1980. $100K today is equal to $35K in 1980. And both the pensions and 401K’s seem to still be running on the idea that inflation is very low. If we still configured inflation as we did in 1990, we would be running at over 6%.