The Recession and Older Americans

In the midst of the worst economic downturn since the Great Depression, millions of American seniors have seen a decline in their standard of living and are struggling to survive.  Unemployment among older workers doubled since 2007 while household incomes fell and medical costs rose, according to a report released Tuesday at a Senate hearing chaired by Sen. Bernie Sanders. The hearing on the recession and older Americans by the Subcommittee on Primary Health and Aging was held one day before the Social Security Administration is scheduled to announce whether more than 50 million retirees will receive a cost-of-living adjustment for the first time in three years.

At a time when some in Congress want a new formula to cut back on seniors' COLAs, Sanders said the current formula is inadequate and understates seniors' purchasing needs - especially the steeper costs that older Americans incur for health care and prescription drugs.  He wants a new formula which more accurately reflects those needs.

A new Government Accountability Office report on seniors and the recession was presented by the hearing's leadoff witness. Barbara D. Bovbjerg testified that the recession "has had a profound impact on older adults." The non-partisan research arm of Congress found that unemployment rates doubled and remained higher than before the recession for workers aged 55 and older. Household incomes fell by 6 percent for those 55 to 64 years old. For those 65 and older, Social Security and other benefits helped their modest household incomes creep up enough to keep them out of poverty.

While lifetime savings and home values for many seniors declined, "the major challenges for older adults are that they face a shorter timeframe before retirement to make up for these losses," Bovbjerg said.

Another witness, Dr. Sandra Nathan of the National Council on Aging, stressed the need to protect the 13 million older adults "who are living on the edge - living one health incident, one car repair, one missed rent payment, one roof leak, or one layoff away from poverty."

Professor Eric Kingson of Syracuse University said Social Security is the only pension protection available to six out of ten working persons in the private sector.

Many seniors are forced to re-enter a bleak job market to maintain their standard of living, according to Heidi Hartmann, president of the Washington-based Institute for Women's Policy Research. "It is likely that a continuing slow recovery will mean that many older unemployed workers will never find jobs," she said.

One who did find work after a long struggle is Gail Ruggles of Newark, Vt. Now an administrative assistant for a medical technology firm, the 61-year-old described her experience with what she called "the downward senior spiral" into a series of part-time jobs that didn't pay enough to meet her bills. She credits Vermont Associates for introducing her to a Senior Community Service Employment Program that trains low-income, unemployed individuals who were 55 years old or older.

Now, she said, "I sleep better, eat better, and can almost afford my heat. The downward spiral is reversed. I can hold my head up when I get home. My kids are proud of me."

To read the GAO report, click here.