Olivia S. Mitchell, Penn Wharton Public Policy Initiative Faculty Affiliate and Professor of Business Economics and Public Policy, testified before the Senate Special Committee on Aging. The focus of the hearing was, “The Changing Face of Retirement Security in America,” and Mitchell’s testimony pertained to her research on the rising indebtedness faced by the Baby Boom generation.
Here is an excerpt from her testimony:
This is a challenging time to be growing older in America. Thirty years ago when my parents retired, they had a secure lifetime pension along with a generous retiree medical plan. Interest rates were high enough to secure them a steady income without spending down their nest eggs too quickly. They also had inflation-protected lifetime benefits from Social Security and Medicare, and they held no debt. And their four children whom they’d saved enough to educate could always be relied on for help.
By contrast, we Boomers face a much different future. We worry that Social Security and Medicare, as well as the Disability Insurance system, are fragile. Few of us have retiree medical coverage and traditional defined benefit pensions. Some of us with defined contribution pensions have not saved enough, nor are we converting our assets into longevity-protected income streams so as to avoid outliving our saving. Interest rates are so low that holding TIPS is a losing proposition. With longer lifespans in the offing, we very much need protection for long-term care costs, but the products aren’t widely available or affordable. And many more Boomers are in debt than we have seen in generations. This rising indebtedness is the focus of my comments today.