(As seen in the Elk River Star News)
When many of us think about the financial impact of the COVID-19 outbreak, job losses and cutbacks come to mind. However, for many Americans approaching retirement, there is an additional layer of hardship: forced early retirement.
It’s more common than you might think: individuals with several productive earning years left in their career have been forced to take a step back from their work because they have been either laid off or cannot assume the risk of COVID-19 exposure. The last year alone has seen a 7% increase in retirees, which now make up 60% of individuals who are not employed.
When retirement comes earlier than expected, every asset counts. We must ensure that older Americans are able to fully draw on the financial resources they have worked a lifetime to build. Real estate, for example, accounts for a sizeable portion of seniors’ net worth. Home equity in primary residences alone account for nearly 17% of the net worth of those between the ages of 65-69. When you add in second homes, like cabins, the share increases to over a quarter of their net worth.
Real estate isn’t the only way that seniors have built wealth. Assets like businesses and stocks can help build a nest egg that sustains financial stability well into retirement. However, the IRS is putting seniors at a troubling disadvantage. Currently, the IRS does not distinguish between the real capital gains earned by an asset (like a stock increasing in value) and value gained from government-created inflation.
This failure results in a tax structure that punishes seniors for saving responsibly. My Retirement Inflation Protection Act will protect all Americans from paying inflation-induced capital gains on the nest egg that they’ve built over a lifetime, ensuring that they won’t be whittled away with taxes as they’re entering retirement. Creating this safeguard for retiring Americans’ hard-earned assets will enable them to feel more secure in their retirement. I am proud to reintroduce this legislation in the 117th Congress to support older Americans when they need it most.
This is just one of my efforts to support seniors during this difficult time. You can read more about my work on my website, here. I look forward to continue working on policies that protect everyone’s financial security, especially those who are heading into retirement.