Summary
Retirement Savings Shortfalls for Today’s Workers
2010 RETIREMENT SAVINGS SHORTFALLS (RSS): Using its unique Retirement Security Projection Model,® EBRI can estimate the total national aggregate and individual retirement deficits at age 65 for Early Boomers (born between 1948–1954, now ages 56–62), Late Boomers (born between 1955–1964, now ages 46–55), and Generation Xers (born between 1965–1974, now ages 36–45). This article reports these 2010 Retirement Savings Shortfalls (RSS).
NATIONAL RETIREMENT SHORTFALL: $4.55 TRILLION: The aggregate RSS for these age cohorts expressed in 2010 dollars is $4.55 trillion, for an overall average of $47,732 per individual. The average RSS varies by age cohort as well as gender and marital status. The RSS per individual is always lowest for households, somewhat higher for single males, and more than twice as large for single females. The estimated retirement shortfall for any gender/marital status combination increases for younger cohorts, largely due to the impact of health care-related costs rising faster than the general inflation rate.
NURSING HOME AND HOME HEALTH CARE: Adding nursing home and home health care expense increases the average individual RSS for married households by $25,317. Single males experience an average increase of $32,433, while single females have an increase of $46,425.
The Impact of the COBRA Premium Subsidy on Coverage
ARRA AND THE COBRA SUBSIDY: The American Recovery and Reinvestment Act of 2009 included a provision for the federal government to pay 65 percent of the premium for individuals who were covered under COBRA and who incurred an involuntary job loss between Sept. 1, 2008, and Dec. 31, 2009. The subsidy was made available for up to nine months, and was extended by Congress three times, with the last extension occurring in April 2010. This article examines trends in coverage through a former employer to analyze the impact of the COBRA subsidy.
LOWER TAKE-UP THAN EXPECTED: There are widely conflicting estimates of how many people benefited from the COBRA subsidy, but generally there has been lower-than-expected take-up of the subsidy. This may be due to the fact that, even after the subsidy, COBRA premiums may not be affordable for many families, especially at a time when they have seen a decline in income and since health insurance is expensive even with the subsidy.
CENSUS BUREAU DATA: Using data from the Survey of Income and Program Participation (SIPP), a nationally representative survey conducted by the Census Bureau, this analysis finds that the COBRA subsidies that became available in April 2009 do appear to have had an impact on the percentage of nonworkers with coverage through a former employer—but they appear to have assisted far fewer than the estimated 7 million individuals. This has implications for the impact of the subsidies that will become available in 2014 under provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA), and may mean the number of uninsured may not fall as much as predicted.