Loss Of Financial Safety Net Worries Workers

Financial stress is increasing among Americans as responsibility for funding retirement and health care shifts from employers and the government to individual workers and their families, according to a study commissioned by MetLife. The study's findings are in line with observations about social and economic trends made during recent Congressional hearings examining the impact of growing income inequality and financial insecurity on middle class families.

The Metlife study is based on a survey of 1,500 Americans representing a wide range of ages, income levels, and education levels. Results showed that 56% of those surveyed believe they carry more financial burdens than their parents did, and 80% predict financial burdens for Americans will be greater in 10 years than they are today. The survey also found that 65% feel they are on their own in planning their finances, and 68% believe their family's financial future is more at risk today than in the past.

The erosion of employer-sponsored benefits appears to have exacerbated concerns about the future among many of the workers surveyed. Some 63% feel frustrated that they can no longer count on employer-sponsored benefits, such as health care and pension plans, as previous generations could. Moreover, 61% feel pressure to provide for their own retirement because they are receiving less generous retirement or pension benefits than they had originally anticipated.

Nearly three-quarters of respondents (73%) expressed concern that government-sponsored benefits, such as Social Security and Medicare, will not be available to support them in retirement. The survey further showed that 72% think Social Security benefits will not be available for future generations, and 53% are worried that the Medicare program will disappear.

The survey found that workers who have changed jobs a number of times differ in their views about whether this high level of mobility is positive or negative. Some 56% of respondents expect to change jobs more frequently in the course of their working lives than their parents did. Among this group, 47% said their job changes have been mainly based on personal and career goals, while 53% reported they have been forced to change jobs to maintain an income sufficient to meet their basic needs.

While 81% of survey participants believe that hard work can lead to the achievement of the American dream, 86% feel that Americans are working as hard or harder than ever just to get by, and 57% think the rich have an unfair advantage in the U.S.

When asked what the "American dream" means to them, the top responses among survey participants were financial security, freedom from want, family and children, home ownership, and a comfortable retirement. When asked if they believe they have achieved the American dream, 66% of respondents said they have yet to achieve it. Among those respondents, however, 67% said they believe it is still possible to achieve the American dream in their lifetimes.

"The financial burden shift is having profound implications on how Americans define and approach the American dream," said Rob Henrikson, chairman, president, and CEO of MetLife. "Where previously the American dream was defined as a combination of homeownership, a happy family life, and financial security stemming from a stable career, the defining theme now is almost a singular desire for financial security."

The study also revealed that, in the minds of many people, simply reaching the goals they have set for themselves does mean they have achieved the American dream. Some 73% of respondents told researchers they view the American dream as a never-ending pursuit and believe they can always do more to attain it. While 34% claim to already have what they need and believe the necessities in their lives will remain constant, 66% feel the bar is constantly rising in terms of the basic necessities of life. Results showed that younger generations are particularly likely to feel pressure to buy more and better material possessions.

The findings of the MetLife study echo comments made by political and economic experts on the financial challenges facing working Americans during Congressional committee hearings held on January 31.

Testifying before the Joint Economic Committee, former U.S. Treasury Secretary and Harvard University economics professor Lawrence Summers said, "If we are to assure adequate economic security for all of our citizens, we need to recognize that in a world where jobs are going to be increasingly impermanent, economic security cannot come only from the employment relationship."

Summers recommended that lawmakers consider new approaches in the areas of health insurance and benefits, as well as consider providing "wage insurance" to help mitigate the effects of a loss in earnings when workers change jobs.

Jacob Hacker, political science professor at Yale University, noted in his testimony before the House Ways and Means Committee that income volatility has risen even faster than income inequality and has become a serious problem for workers at all education levels. He further observed that feelings of financial insecurity among Americans are driven not just by the risks posed by sharp fluctuations in earnings, but also "by the rising threat to family finances posed by budget-busting expenses like catastrophic medical costs, as well as by the massively increased risk that retirement has come to represent."

Over the last generation, Hacker said, "we have witnessed a massive transfer of economic risk from broad structures of insurance, whether sponsored by the corporate sector or by government, onto the fragile balance sheets of American families." This insecurity, he concluded, "strikes at the very heart of the American dream."