- Personal Finance»
Social[ism] Security: New Report on Retirement Crisis Gives Bernie Sanders a Political Edge
Social Security is Facing a Crisis
Will Socialism Appeal to Those Facing Retirement Crisis?
While the existence of a looming retirement crisis in the United States is nothing new, a recent report by the U.S. Government Accountability Office (GAO) may help turn the looming crisis into an immediate political firestorm. Almost 30 percent of Americans age 55 or older have absolutely zero savings for retirement, which usually begins at age 65, and another 23 percent have an IRA or 401(k) but no separate retirement savings. Only 48 percent of Americans age 55 or older have some retirement savings.
CBS News reports that the GAO is far from alone in sounding the alarm: Virtually every study on older Americans and their finances reports that a crisis is on the horizon. A majority of Americans will either not be able to retire on time or will have to make significant reductions in lifestyle. For many older Americans, it will be both. Already, the Social Security retirement age has been slated to increase from 65, where it was originally set in 1935, to 67 by 2022. Some analysts are worried that this may be insufficient, and that the retirement age may need to be pushed to 70. As America ages rapidly and fewer young workers earn decent wages, there will be less Social Security money available per retiree.
With a new presidential election coming up, Baby Boomers will have an opportunity to support a candidate who will aggressively advocate for retirees and their finances, especially Social Security and public sector pension plans. In this regard, Democratic candidate Bernie Sanders, a self-proclaimed Democratic Socialist, stands to attract many Boomer voters. Already attracting considerable attention for his populist positions, Sanders is widely known for wanting to increase Social Security taxes on the wealthy. The Social Security payroll tax only applies to the first $118,500 of income, meaning that the wealthiest Americans are underpaying on Social Security compared to the middle class.
Sanders' staunch support of keeping Social Security solvent may help him win the powerful senior citizen vote in the Democratic primaries. This group could be a game-changer, for it has largely been ignored in political media coverage thus far in the 2016 cycle. While the media has focused heavily on younger voters and social issues, which have more "sex appeal" than fiscal issues pertaining to retirees, this ignored bloc of voters stands be quite powerful when votes are actually cast. Younger voters, by contrast, often tend to generate lots of political coverage but then ignore the voting booth on election day.
But, with Sanders' proposal of free public higher education for all, he also stands to win big among Millenial voters as well. While many young women may still be excited about Hillary Clinton, others may solidly swing toward Sanders, hoping that he will be able to improve their financial situation. Social issues are important, but many voters tend to favor their wallets when they cast their ballots.
For both the young and old, Sanders' proposals improve their financial situation. As more alarm bells sound about the cost of college and cost of retirement, look for Sanders to gain in the polls.