Economy

GAO: Changing social, labor trends make retirees financially vulnerable

foil.seal.gaoA recent report from the Government Accountability Office found that changes in marriage and labor trends have led to changes in the type of retirement benefits received by Americans, making some retirees more financially vulnerable.

According to the report, the percentage of households that identify as unmarried or single-parent families has increased substantially since the 1960s, particularly among low-income individuals with less education and among some minorities.

Simultaneously, the number of women in the workforce has increased, thereby resulting in changes to the types of Social Security benefits households receive. The report said fewer women receive spousal benefits today than in the past, and the shift away from defined benefit plans towards defined contribution plans that offer fewer spousal protections may mean some groups of seniors may need financial help in retirement.

Defined benefit plans are pension plans in which an employer promises monthly benefits based on the employee’s past earnings, age and length of service, whereas defined contribution plans are retirement plans in which the employer and/or employee both make contributions on a regular basis.

“DC plans… place greater responsibility on households to make decisions and manage their pension and financial assets so they have income throughout retirement,” the report said. “[D]espite Social Security’s role in reducing poverty among seniors, poverty remains high among certain groups of seniors, such as minorities and unmarried women. These vulnerable populations are more likely to be adversely affected by these trends and may need assistance in old age.”

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