Poverty in Retirement: The Long-Term Impact of Rising Economic Inequality
David W. Rasmussen

Abstract
The dramatic decline in poverty after 1960 among households 65 and over is about to be reversed. The labor market is being hollowed out as employment growth is concentrated in high and low wage occupations. This rising inequality will cause an increasing portion of households to be less prepared for retirement as they approach age 65: they will have saved less, have diminished access to defined benefit pension plans, and face smaller social security benefits due to lower life-time earnings even if the system can sustain current benefit levels. Prospects of lower saving in the context of declining defined benefit pension plan coverage indicates that Social Security will be even more important in the future. Instead of attempting to fix the system to sustain current benefit levels, reforms should account for this new reality.

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