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Late Baby
Boomers’ retirement may be hurt by housing
market collapse
In the face of proposals to cut or delay
benefits for Social Security and Medicare,
the Center for Economic and Policy Research
(CEPR), a nonpartisan think tank, warns
Congress should “take into account the
financial situation of near retirees” who
could be almost completely dependent on
Social Security and Medicare benefits to
support their retirement.
According to a CEPR report, due the collapse of the housing
bubble the majority of people who were
between the ages of 45 and 54 in 2004 will
accumulate little or no wealth by 2009.
The CEPR looked at three scenarios in which 2009 housing
prices remained the same, dropped 10
percent, or dropped 20 percent; even when
prices remained the same, the median
household would have 24.7 percent less than
in 2004.
In contrast, those who rent their homes will have more in
2009 than in 2004 in all three scenarios.
The combination of the destruction of housing wealth with a
low personal savings rate may leave many
near retirees completely reliant on Social
Security and Medicare benefits during
retirement.
“With the economy slowing, it is more important than ever
to ensure Social Security and Medicare
remain strong and available to retirees as
they were intended to be, rather than tools
of private companies left to the whims of
the markets,” said Alliance Executive
Director
Edward
Coyle.
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