How’s Your Retirement Fantasy?
While watching a ball game the other day a commercial about retirement planning caught my attention. The ad featured an animated gentleman complaining about other commercials that focused on retirement planning. His point was the overwhelming disconnect between how the advertising world portrayed retirement and his reality “I just want to retire comfortably; I don’t want to sail around the world or buy a vineyard. My goal is to take care of myself and our family, a vineyard – really?”
While post-work fantasies play out in the media world, the real world reveals just how lofty a goal taking care of oneself in retirement is going to be – really!
According to a recent article in the St. Louis Post-Dispatch, Take charge of 401(k) to keep retirement in sight ”People are not even close to where they need to be in total savings,” said Laurie Nordquist, director of Wells Fargo Institutional Retirement. “Barring a miracle, a winning lottery ticket or a big inheritance, they’re going to be forced to dramatically cut back their lifestyles after retirement.”
If that isn’t bad enough consider that 1 in 3 Americans has ZERO in any retirement account .
Even worse, 43% of Americans have less than ten thousand dollars in retirement savings (Business Insider).
Retirement Security is also facing tremendous pressure from the decline of Defined-Benefit Pensions. According to the U.S. Government Accountability Office (GAO), single-employer Defined-Benefit Pension plans have declined from 92,000 on 1990 to under 29,000 in 2009.
This trend is accelerating as almost every labor dispute in the last two years has included employer demands to either eliminate Defined-Benefit Pension plans or “grandfather” existing workers while removing the option for newer workers and substituting Defined-Contribution or 401(k) plans ( UAW-Big 3, Steelworkers-Honeywell in Metropolis, IL and Machinists – Boeing).
Of course, the corporate media has served as cheerleader for this push to rid their fellow corporations and advertisers of responsibilities associated with Defined-Benefit Pensions and has recently turned its attention to Public Sector Workers with a zeal only a cheerleader could aspire to. This story on 60 minutes is one example. Economist Dean Baker puts the 60 minutes story into context .
That said, it is apparent the “3 legged stool” of retirement – Private Pensions, Personal Savings, and Social Security is wobbling like a drunken sailor on the Titanic. With Defined-Benefit Pensions in decline, 401(k)’s underperforming, and savings almost non-existent it seems like an odd time for crotchety Alan Simpson and the Deficit Commission to propose reducing Social Security benefits.
A recent study by Mark Rank of Washington University in St. Louis showed more than half of Seniors are at risk for Poverty. Considering Social Security provides over forty percent of the average recepients income, now is not the time to reduce benefits because its surplus has been used for war and tax cuts for the rich.
Declining retirement security will affect younger Americans directly as fewer jobs become available because Seniors are forced to keep working just to get by. One of the reasons Franklin Roosevelt pushed for Social Security was to provide an incentive for older workers to retire and create job openings for younger workers. This same thought process was behind the “30 and Out” Pensions bargained by former UAW President and TIME “Man of the Year” Walter Reuther.
To avoid this oncoming disaster for American Seniors we should,
Enact policies that encourage Defined-Benefit Pensions. The 401(k) experiment has failed the majority of Americans.
At least, maintain Social Security which will only require modest changes (Check out the chart of where the U.S. stands on retirement benefits among the industrial nations. Hint: about the same as health care ranking).
Expand Social Security
I look forward to your comments on this issue.