Working to 70 is not an easy fix to the retirement crisis

By Gail MarksJarvis

CHICAGO (Reuters) – It may seem a simple solution to the brewing U.S. retirement crisis: Get people to work until 70 before retiring and 85 percent will have the money they need for retirement.

They will save more during additional years in jobs and leave existing savings untouched while getting paychecks; plus they have fewer years in retirement to cover living expenses with their savings, noted Alicia Munnell, director of Center for Retirement Research at Boston College.

But despite the math that attracts economists and lawmakers worried about funding Social Security and Medicare, it turns out that it is not so easy.

James Poterba, an MIT economics professor, pointed to the problem at a Brookings Institution forum on the topic last week.

“Not everybody can work longer,” said Poterba, who is also president of the National Bureau of Economic Research. He contrasted workers in physically demanding or unpleasant jobs to economists in academic offices comfortably churning out studies on Social Security fixes.

While many professors cling to their jobs well into their 70s, research shows many people do not have that option.

The Urban Institute noted in a new study that about 10 percent of those over 50 had to leave their jobs because of health. But Urban Institute economist Richard W. Johnson, who studied work records of people over 50 in the federally funded Health and Retirement Study, said ageism is driving far more older workers away from their jobs, regardless of education, race or gender.

Older workers also had trouble finding new jobs. Half had their income fall more than 42 percent, and only one in 10 ever earned as much as they had been making before losing their job. A third of those over 50 who lost jobs also had it happen again.

“Even now, when the labor market is tight, ageism is still there,” Johnson said.

ALTERNATIVES

While people may not make it to 70, economists recommended trying to work as long as possible. Stanford economist John Shoven has found that retiring at 66, instead of 62, can lift the standard of living by a third.

One suggestion from Munnell to convince employers to keep older workers on the job longer: declare 70 the new full retirement age for Social Security instead of the 66-1/2 to 67 it is now.

Munnell explained that employers are sometimes afraid to hire people in their 50s because they fear that person will stay indefinitely to build up meager 401(k) savings. If the retirement age were 70, the employer would perhaps hire an older person, knowing the employee eventually would leave.

But raising the retirement age is a political hot potato, mostly because people in lower-income and physically demanding jobs would receive less money if they claimed Social Security earlier than 70. President Donald Trump has promised not to alter Social Security.

Another idea proposed by Stanford economics professor John Shoven and Robert Clark, a North Carolina State University economics professor, is to relieve employers and employees of paying payroll tax toward Social Security for workers over 62.

Currently, both employees and employers face a payroll tax of 6.2 percent of earnings up to $132,900. As more older people work, Shoven and Clark argue higher income tax receipts could offset Social Security’s lost revenue.

Yet, Steve Goss, the Chief Actuary of the Social Security Administration, does not think those savings would be passed along to workers in higher wages or to increase the labor supply of older people.

Also, if Social Security suffers a loss in revenue, younger workers might have to pay higher taxes, leaving them less able to save for their own retirement and perpetuating the cycle of the retirement readiness crisis.

(Editing by Beth Pinsker and David Gregorio)

Air travel fears mount as U.S. government shutdown drags on

An employee with the Transportation Security Administration (TSA) checks the documents of a traveler at Reagan National Airport in Washington, U.S., January 6, 2019. REUTERS/Joshua Roberts/File Photo

By David Shepardson

WASHINGTON (Reuters) – U.S. airport security workers and air traffic controllers working without pay warned that security and safety could be compromised if a government shutdown continues beyond Friday when some workers will miss their first paychecks.

On the 19th day of a partial government shutdown caused by a dispute over funding President Donald Trump wants for a border wall, the president stormed out of talks with Democratic congressional leaders, complaining the meeting was “a total waste of time.”

As the effects of the shutdown began to ripple out, the Trump administration insisted that air travel staffing was adequate and travelers had not faced unusual delays.

But union officials said some Transport Security Administration (TSA) officers, who carry out security screening in airports, had already quit because of the shutdown and others were considering quitting.

“The loss of (TSA) officers, while we’re already shorthanded, will create a massive security risk for American travelers since we don’t have enough trainees in the pipeline or the ability to process new hires,” American Federation of Government Employees TSA Council President Hydrick Thomas said. “If this keeps up there are problems that will arise – least of which would be increased wait times for travelers.”

Aviation unions, airport and airline officials and lawmakers will hold a rally on Thursday outside Congress urging an end to the shutdown.

TSA spokesman Michael Bilello said the organization was hiring officers and working on contingency plans in case the shutdown lasted beyond Friday, when officers would miss their first paycheck since the shutdown began on Dec. 22.

“There has been no degradation in security effectiveness and average wait times are well within TSA standards,” he said.

He added that there had been no spike in employees quitting and that on Tuesday 5 percent of officers took unscheduled leave, up just slightly from 3.9 percent the same day last year. It screened 1.73 million passengers and 99.9 percent of passengers waited less than 30 minutes, the TSA said.

But U.S. Representative Bennie Thompson, chairman of the House Homeland Security committee, questioned how long adequate staffing at airports could continue.

“TSA officers are among the lowest paid federal employees, with many living paycheck-to-paycheck,” Thompson wrote. “It is only reasonable to expect officer call outs and resignations to increase the longer the shutdown lasts, since no employee can be expected to work indefinitely without pay.”

Airports Council International-North America, which represents U.S. airports, urged Trump and congressional leaders in a letter to quickly reopen the government.

“TSA staffing shortages brought on by this shutdown are likely to further increase checkpoint wait times and may even lead to the complete closure of some checkpoints,” the group said.

The National Air Traffic Controllers Association (NATCA) noted that the number of controllers was already at a 30-year low, with 18 percent of controllers eligible to retire.

If a significant number of controllers missed work, the Federal Aviation Administration could be forced to extend the amount of time between takeoffs and landings, which could delay travel, it said.

NATCA President Paul Rinaldi said controllers often must work overtime and six-day weeks at short-staffed locations. “If the staffing shortage gets worse, we will see reduced capacity in the National Airspace System, meaning more flight delays,” Rinaldi said.

(Reporting by David Shepardson; Editing by Diane Craft and Rosalba O’Brien)

Trump holds firm on border wall, offers steel option as compromise

U.S. President Donald Trump speaks to the media as he returns from Camp David to the White House in Washington, U.S., January 6, 2019. REUTERS/Joshua Roberts

By Jeff Mason and Ginger Gibson

WASHINGTON (Reuters) – U.S. President Donald Trump pledged on Sunday not to bend in his demand for a wall along the southern border with Mexico but said the barrier could be made of steel instead of concrete as a potential compromise with Democrats who refuse to fund it.

Trump’s comments came at the start of the third week of a partial government shutdown resulting from the dispute that has left hundreds of thousands of federal workers idled or without paychecks.

Trump threatened again, without providing specifics on where the funding would originate, to declare a national emergency as an alternative way to build the wall, depending on the outcome of talks in the coming days.

Democrats have declined to approve the $5.6 billion Trump wants to fulfill a 2016 campaign promise to curb illegal immigration. Led by new Speaker Nancy Pelosi, Democrats passed a bill in the House of Representatives last week to reopen the government without wall funding. Pelosi has called a border wall immoral.

“This is a very important battle to win from the standpoint of safety, number one, (and) defining our country and who we are,” Trump told reporters at the White House before leaving for a short trip to the Camp David presidential retreat.

“The barrier, or the wall, can be of steel instead of concrete if that helps people. It may be better,” he said.

The White House painted that offer, which Trump floated previously, as an olive branch.

In a letter to congressional leaders on Sunday detailing its funding demands, the Trump administration included a request for an additional $800 million to address urgent humanitarian needs at the southern border.

Mick Mulvaney, Trump’s acting chief of staff, told NBC’s “Meet the Press” that agreeing to a steel barrier would allow Democrats to stick to their refusal to fund a wall.

“That should help us move in the right direction,” he said.

House Majority Leader Steny Hoyer did not show his hand when asked whether the White House offer to move away from a concrete structure was evidence of compromise.

“It’ll be discussed,” he said on NBC.

Vice President Mike Pence led a second round of talks with congressional aides on Sunday about the issue, but Trump said he did not expect those talks to produce results, noting that the principals – himself, Pelosi and Senate Democratic leader Chuck Schumer – were the ones who could solve it quickly.

“If we don’t find a solution, it’s going to go on for a long time. There’s not going to be any bend right here,” Trump said.

He later tweeted that the Pence talks were productive. But a Democratic aide familiar with the meeting said Democrats urged the White House to pass measures to reopen the government without wall funding and Pence said Trump would not do that. The aide said no progress was made and no further meetings of the group were scheduled.

OTHER CONCESSIONS?

Democrats could demand other concessions from the White House, such as protections for immigrants brought illegally to the United States as children, known as Dreamers, or changes to other spending provisions. Trump said he wanted to help on the Dreamer issue but preferred to wait for a Supreme Court ruling on it first.

Democratic U.S. Senator Dick Durbin reacted coolly to Trump’s suggestion of declaring a national emergency. “I don’t know what he’s basing this on, but he’s faced so many lawsuits when he ignores the law and ignores tradition and precedent,” Durbin said on CBS’ “Face the Nation.”

Large chunks of the federal government were shut down on Dec. 22 after lawmakers and the president hit an impasse over Trump’s demand that a bill to keep the federal government operational include money to help build a $23 billion wall along the U.S. border with Mexico. About 800,000 government workers are either furloughed or working without pay.

“I can relate,” Trump, a former New York businessman, said when asked if he could relate to the pain of federal workers struggling to pay their bills. “I’m sure that the people that are on the receiving end will make adjustments.” Asked if workers would get paid on Friday, Trump said: “We’ll see whether or not it’s settled.”

Not all Republicans agree with Trump’s insistence on keeping government agencies shuttered until the border debate is resolved.

“It is not a sign of weakness to try to figure out a middle ground, and I think that both sides need to indicate a willingness to listen and to compromise, U.S. Senator Susan Collins of Maine said on NBC. She called the debate over using steel versus concrete “bizarre.”

House Democrats plan to pass a series of bills this week to reopen government, breaking up legislation they have already approved in a bid to get Republicans to agree to reopen certain agencies, Hoyer said on “Meet the Press.”

“We need to open up government and then negotiate. Not the other way around,” he said.

(Reporting by Jeff Mason and Ginger Gibson; Additional reporting by Amanda Becker and Pete Schroeder; Editing by Lisa Shumaker and Peter Cooney)