As Ranking Member of the Senate Aging Committee, an issue I care deeply about is whether older Americans will have the financial resources they need to be secure in retirement. After four decades in the workforce, seniors should be confident they will have the money they need to pay their bills and enjoy their retirement, without fearing they will be overtaken by debt and fall into poverty.
Far too many American seniors struggle with inadequate savings, limited income, and too much debt. The importance of Social Security to low-income retirees cannot be overstated. Here in Maine, one in three retirees has no source of income beyond Social Security.
Add to this, the troubling trend of increasing debt held by older Americans: a recent study by the Urban Institute found that the share of Americans 65 or older who are in debt grew from 30 percent in 1998 to 43 percent in 2010. That study also found that the median debt held by these seniors increased 56 percent, from about $13,600 to $21,200.
About half of this mounting debt is attributable to mortgages, and much of the rest traces to various forms of consumer debt, such as auto loans and credit card balances. While a considerably smaller source, student loan debt is also an issue for more and more seniors.
The Government Accountability Office (GAO) recently released a report that found that three percent of households headed by seniors still have student loan debt. Most of these loans were taken out by seniors and used to finance their own education, not that of their children or grandchildren. The default rate for these loans – 31 percent – is more than twice that of the default rate for loans taken out by borrowers between the ages of 25 and 49, a troubling statistic.
Seniors whose loans are in default can have their Social Security benefits garnished and reduced to as little as $750 a month. This floor was not indexed for inflation, and is now far below the poverty line. I intend to introduce legislation to adjust this floor for inflation over the past 15 years and index it going forward, to make sure garnishment does not force seniors into poverty.
Whether it’s paying the mortgage, medical bills, or prescription drugs, I have heard countless stories of retirees whose savings are not going as far as they anticipated. As our population continues to age, we must continue to work to help ensure that our seniors have the resources they will need to eliminate debt, save, and enjoy retirement. Earlier this year, Senator Bill Nelson (D-FL) and I introduced a bill that would make it easier for small businesses to provide access to retirement plans for their workers which would help make a significant difference in the financial security of many Americans. Our bill would be a significant step toward a more secure and happy retirement.