September 6, 2012
Campaign Discourse Misses Major Issue
Retirement-income security is receiving little attention as the presidential campaign heats up, despite a mound of evidence that Americans’ retirement prospects are stagnating – or worse.
While Medicare has been at the center of the debate, there has been little emphasis on the broader topic of income security for what remains the largest demographic bulge in U.S. history – the baby boomer generation – and now the largest block of retirees.
In the retirement community, however, debate swirls constantly about how bad the situation really is. These debates are slicing the onion awfully thin when one research paper or report after another contains a new aspect of the troubling fallout from the final years of a transition from secure, employer-guaranteed pensions to DIY retirement. Sometimes it seems that Wall Street’s collapse in 2008 was just the kickoff for the bad news on the retirement front.
A new report from Boston College’s Center for Retirement Research, which funds this blog, finds that just 42 percent of workers in the private sector had pension coverage in their current jobs in 2010 – that’s coverage of any kind, including the defined-contribution plans that now dominate. Yikes!
The Center noted that these data cover company workers of virtually all ages, and many of them will eventually move into jobs that offer pension plans. Nearly two in three employees end up with coverage at some point either on their own or through a spouse. But during the time that they lack coverage, they may not be saving. This patchwork system adds to our nation’s future pension problems.
Here are some other sobering findings:
- According to the Employee Benefits Research Institute, 52 percent of Americans are confident they’ll have enough money to live comfortably in retirement – that’s down from 70 percent a decade ago.
- Half of the elderly living alone and one-third of couples have less than $10,000, a figure that does not reveal how much suffering went into preserving even that small amount.
- 401k balances for baby boomers on the crest of retiring? Figures vary but they don’t amount to even a single year of wages for many – and they’re not going up either.
- The student loan crisis is tough on college graduates, but some parents are also robbing their 401ks to help them out.