Remapping Debate wanted to find out how much it would cost to guarantee that workers currently aged 45 to 64 will be at roughly the same standard of living in retirement as they were pre-retirement, or, failing that, to find out how much it would cost to keep them out of poverty. It proved surprisingly difficult.
We asked Barbara Butrica, a senior research associate at the Urban Institute, a non-partisan think tank created by the Johnson Administration in 1968 to study poverty and other urban issues, if her organization had an estimate. “If anyone could come up with some estimate, we could. We haven’t done that, and it’s not something we could quickly turn around,” she said.
When asked why the Urban Institute had never researched this question, Butrica said it is highly complex, and that even giving a rough estimate would be difficult due to the degree of variation among individuals and ambiguity over what the goal should be: “What does it mean to have security in retirement? Is it to be above poverty? Is it to have 75 to 80 [percent] replacement rate? Probably a lot that has to do with why more research hasn’t been done on this is these questions haven’t been settled.”
Alan Barber, the domestic communications director for the Center for Economic and Policy Research, also described such research as too complex to be feasible: “When we talk about the poverty line, there’s disagreement of where that is. The White House has one perspective, the progressive caucus [has another, and], the right has even a higher line of what poverty should be. There are so many components that comprise income security…Just the concept of strengthening income security for this cohort — it’s too broad: Too many different factors at play.” We asked whether such a study would be useful if it could be done: “I don’t know. I can’t even think what pieces would go into it.”
Teresa Ghilarducci, an economics professor at the New School, though confident that such research could be done, said it was “complicated…I can’t just do it. I think that’s a really good project and maybe something we should do.” When asked why no one has done this research, she replied, “No one asks for it…In politics there aren’t many advocates for the poor. So most people want to know ‘where [can I] save money and make the most money’ — those are questions for people who already have money, and those are the questions lawmakers are asking for that income group and that’s where the research money is going. So poor people and low-income people don’t have a voice in Washington.”
Ghilarducci was, however, willing to provide a couple of rough estimates. The cost of ensuring every retiree in America reaches the target replacement rate of 70 percent, she said, would be “less than a trillion dollars per year.” More specifically, she said, “I would estimate about a third of that” for just the cohort currently aged 45 to 64. The cost of simply bringing retiree households below 200 percent of the elderly poverty line (what Ghilarducci called the “near-poverty line”) up to that mark, however, is significantly less costly still. By taking the number of retiree households in the bottom two quartiles of U.S. income distribution and estimating those groups’ average income distance from 200 percent of the poverty line ($16,000 and $10,000), Ghilarducci estimated for Remapping Debate that “something in the range of $20 billion per year would bring poor and near poor retirees to the near poverty line.”