With the passage of the American Rescue Plan Act in both houses of Congress now codified into law by the signature of President Joe Biden, Americans will be seeing a new round of direct stimulus payments from the federal government in the form of $1,400 checks for individuals. According to data from the Social Security Administration (SSA), this can amount to nearly one extra Social Security payment, coming in just under the $1,543 a month that program beneficiaries receive in 2021.
However, while the additional money in the pockets of seniors is certainly welcome to those living on a fixed income, the payments likely don’t go far enough since such payments are likely to be exhausted quickly by seniors, according to a new piece at MarketWatch.
“It’s worth remembering just how stretched millions of seniors—tens of millions, in fact—are,” the piece by columnist Paul Brandus reads. “According to this survey by the Transamerica Center for Retirement Studies (see page 28), the median retirement savings for Americans in their 60s is $172,000 (median means half have more and half have less than this). Given the general rule that you can withdraw 4% of your savings to live on each year, that’s just $6,880 annually—or $573 a month.”
Half of Americans in their 60s have less than even that figure, Brandus says. When combined with the average Social Security check, that comes out to $2,116 a month, “hardly the lap of luxury,” he says.
Retirement security is also likely to become more challenged in the future, not less, he says. This is exacerbated by older workers being shed at an increased rate by employers in 2020, who cited the economic difficulties of the pandemic as justification for trimming their workforce.
[W]hile the economy has begun to bounce back, many [older workers] are finding it awfully hard to find work—at least with the kind of pay, benefits and working conditions they’ve been used to,” the column reads. “Research by the Schwartz Center for Economic Policy Analysis (SCEPA) at New York’s New School, says it has been particularly hard on older workers ‘who are Black, female, or lack a college degree, experienced higher rates of job loss and are more exposed to retirement risks.’”
SCEPA also contended that under the administration of Former President Donald Trump, advocates for older workers complained that violations of age discrimination restrictions were not being enforced by relevant federal authorities, emphasizing the difficulties that seniors have faced regarding retirement finances.
“With meager savings, modest payments from Social Security, soaring health costs […] what will all these people do?,” Brandus asks rhetorically. “The pandemic relief aid that millions of seniors will soon get is welcome, but in the overall scheme of things, looks to be nothing more than a drop in the bucket.”