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Where We Stand

Rebuild the Middle Class

The decline of the middle class threatens our ability to fund health and retirement programs

The prosperity of the middle class has been the basis for the American way of life for the past 60 years. Today that prosperity is eluding many individuals for reasons beyond their control. The decline of the middle class threatens our ability to fund health and retirement programs, to maintain a safety net for the most vulnerable and to invest in our future. It threatens the hopes and dreams of generations of Americans.

Our Public Policy Institute launched a major examination of the dynamics driving the decline of the middle class. Its conclusion: Unless we reverse these trends, 30 percent of those currently in the middle class will fall into "low income" in retirement. The two main forces are rising health care costs and financial insecurity.

Rising health care costs will wipe out any gains people in the middle class are projected to make. Out-of-pocket medical expenses will take an increasing share of retirement income. Future retirees will find it harder than current retirees to maintain their standard of living.

The middle class was hit hard by the Great Recession, especially with loss of jobs, falling home values and reduced savings. At a time when people are living longer, 75 percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. Moreover, roughly half of all workers do not have a retirement plan. And for most of those who do, the likely retirement benefit is less than $80 a month.

This makes Social Security even more important as a source of retirement income. For those likely to fall into "low income" in retirement, Social Security will represent over 80 percent of their income.

Washington's budget debate has been focused on big numbers, but it's really a debate about people and their future. Our children don't have much to look forward to if they are drowning in the red ink of lower income, paltry savings, huge budget deficits and a soaring national debt. How bright can their future be if they cannot afford health care, or a quality education, or if they don't have the opportunity to attain long-term financial security?

At AARP, we are committed to rebuilding and restoring prosperity to middle-class families by:

  • Helping experienced workers find a way to succeed in today's challenging and constantly changing workplace
  • Improving Medicare to make it sustainable and slowing the growth of health care costs
  • Strengthening Social Security by restoring long-term solvency with adequate benefits
  • Finding ways to help close the savings gap as people prepare for retirement
  • Reducing the federal deficit, but not at the risk of jeopardizing the health and financial security of future generations

A strong middle class is the moral backbone of a functioning society. An ever-widening gap between the "haves" and the "have nots" leads to social instability, family strife and paralysis on the socioeconomic ladder.

Our vision at AARP is a society in which everyone lives with dignity and purpose, with access to affordable, quality health care and the opportunity to achieve lifelong financial security — a life where everyone has a realistic chance to attain the American dream.

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