Pension Reform: Beyond 401(k)s
With support from the Rockefeller Foundation and in collaboration with non-profits Demos and the Economic Policy Institute, Teresa Ghilarducci is leading a project titled “Beyond 401(k)s: Guaranteeing Retirement Security.” The project investigates the failure of individual 401(k)-type plans to provide a safe and secure retirement for all Americans and supports Ghilarducci’s proposal for Guaranteed Retirement Accounts (GRAs).
Urban Institute: Boosting Retirement Security for Low-Income Workers
On Tuesday, April 5th, I participated in a panel at the Urban Institute titled "Can We Boost Retirement Security for Low-Income Workers?" I discussed my proposal for Guaranteed Retirement Accounts (GRAs) and how it would help low-income workers retire. Fellow panelists included Barbara Butrica, senior research associate, Program on Retirement Policy at the Urban Institute; Mark Iwry, deputy assistant secretary for retirement and health policy, U.S. Department of the Treasury; David John, senior research fellow, Heritage Foundation and Sheila Zedlewski, Institute fellow, Income and Benefits Policy Center, Urban Institute.
The Collapse of Middle Class Retirement
I recently wrote a piece for the March 11th issue of The American Prospect, which features a special report on "America's Endangered Middle Class; Why Saving it is Ground Zero of American Politics."
The report features a comprehensive review of the state of affairs affecting the middle class, including culture, economy, politics, and education, among others. I was proud to join contributors including E.J. Dionne, Thedad Skocpol, Robert Kuttner, Laurence Mishel, and Heather Bousey.
I write about the collapse of secure retirement and what needs to be done to save middle class men and women - who have worked all their lives - from poverty in their golden years.
Over half of workers have no pension plan. Of those who do, only 20 percent have traditional plans that provide a guaranteed benefit, while the other 80 percent have 401(k)-type plans that shift all the risks to the retiree. In 2009, the account balance for the average-income household with a 401(k) plan was only about $67,000. Even the oldest workers in the highest-earning households, of $100,000 annual income and over, have on average only about $173,000, which yields a lifetime monthly income of just $500.
Pension Envy: Bashing Public Employees
Envy is a celebrity deadly sin, many philosophers think it's the worst. Joseph Epstein writes in Envy, "Envy clouds thought, clobbers generosity, precludes any hope of serenity, and ends in shriveling the heart."
Jealous is intensely felt, you are jealous of what someone has. Envy is cold and sneaky, you are envious for who someone is, not just for what they have. Jealousy about the pensions of government workers spurs you to fight for your own pensions. Envy would spur you to spitefully lobby to cut their pensions. A dose of jealousy helps you; envy hurts all.
The envy machine is cranked up.
The Failure of the 401(k)
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Millions of Americans lost their retirement savings in the recent financial crisis due to the current system’s susceptibility to market volatility, with 401(k) accounts proving particularly vulnerable. On Wednesday, November 10, I joined with Demos, the Economic Policy Institute (EPI), and the Pension Rights center to release a research report that documents the failure of these 401(k)-type accounts to provide secure and equitable retirement—and make recommendations to create a truly reliable system.
Businessweek: Financing Retirement and Guaranteed Retirement Accounts
In July, Bloomberg’s Businessweek issued a special report focused on financing retirement. They invited me to include a description of my proposal for Guaranteed Retirement Accounts.
Here’s an excerpt of the problem:
Over the past 30 years, workplace pensions have morphed from defined-benefit plans (in which the company pays retirees a set amount every month from retirement to death) into defined-contribution plans such as 401(k)s, which are primarily funded by deductions from salaries. In a perfect world, an average worker could amass something like $400,000 in a 401(k) by retirement. After nearly three decades of 401(k) contributions, though, the average account balance for people nearing retirement age is about $60,000, far less than what's needed. So it's no surprise that when a recent Gallup poll asked what Americans want most from government, more chose guaranteed pensions than guaranteed jobs or health care.
