If the nation goes over the “fiscal cliff,” it could be an especially steep dive for older Americans.
If Congress and the White House don’t seal a deal to avert looming tax increases and spending cuts, expect another recession with an estimated 0.5 percent reduction in gross domestic product (adjusted for inflation), warns the nonpartisan Congressional Budget Office. That may not sound like a big deal, but a contraction of the economy isn’t exactly what Americans are hoping for right now.
Here are some of the major ways the cliff dive could affect older Americans:
- Unemployment would rise, according to forecasts, hitting 9.1 percent by the end of 2014. Workers 50 and older were hit especially hard by the recession, and for many a U-turn in the unemployment rate would be more bad news, making it harder for them to recoup their nest eggs before retirement. And extended unemployment benefits would expire, leaving them with less help.
- The stock market could be weighed down. If higher capital gains rates go into effect, people cashing in their retirement savings will pay more in taxes. And if the stock market is depressed, their retirement accounts won’t be worth as much.
- The average family earning $50,000 would pay $2,183 more in taxes, according to the Senate Finance Committee. For 50-plus families saving for retirement or paying tuition bills, paying all the bills will get even harder.
- A slowdown could depress housing prices. For retirees who want to sell their homes and as part of their retirement plans, that’s bad news.
Can you think of other ways older Americans could be affected if we go over the fiscal cliff? Tell us what you think below.