The latest Census data show that more people are living to age 90, according to Healthday. In fact the 90-and-beyond crowd has tripled since 1980, to 1.9 million people today. Most are women (75 percent), and many live alone but are not necessarily
independent and healthy. The average income for people aged 90 and older is $14,760, with almost half of it coming from Social Security.
These statistics are bittersweet. On one hand, diet, medical advancements and other factors are contributing to longer life expectancy. On the other hand, an income of less than $15,000 a year puts them in the bottom 20 percent of earners. Without considering the value of household assets, this isn’t much…particularly when accounting for out-of-pocket health care costs, rising food and energy costs, and home maintenance costs.
The moral of this story is to never underestimate life expectancy (as I noted in the NCPA study, “10 Ways to Wreck Your Retirement”). Yet many people do when they think about saving for retirement. Sadly, while wringing their hands over baby boomers not saving enough, Congress has done little to reform the tax code so that saving is not penalized. A few things could be done now to help create more financial independence for future retirees:
- Reform the tax code so that saving is not penalized…reduce or eliminate the capital gains and dividends taxes.
- Allow IRA holders the same maximum contribution levels as 401(k) holders, which this year is $16,500.
These two things could be done quickly and easily without the partisan debate over entitlement reform. Of course, Social Security reform is badly needed, but at the rate entitlement reform is going (see my previous blog post), that may take years. Congress should, at the very least, free up taxpayers to save for a future of possibly living to age 100.