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Retirement Security - the Forgotten Campaign Issue While the retirement crisis grows more threatening day by day, neither of the leading presidential candidates seems very interested in this critical issue. This, despite the fact that more than 80 million baby boomers are currently ready to retire, and that an estimated one-third of these people will retire on an income that is less than 50% of what they currently earn. The latest forecast is that 75% of Americans born after 1945 will face financial hardship in retirement. According to Bonny L. Brill, Executive Director of The Evelyn Brust Financial Research and Education Foundation, "With Social Security and Medicare in peril and traditional pension plans shifting to 401(k) plans, we are looking into the eye of something profoundly catastrophic." In addition to fixing the enormous problems currently facing those of or near retirement age, the government needs to do more - far more - and do it quickly. We believe that immediately following inauguration, the next president should take the lead in creating a Retiree's Bill of Rights that spells out exactly what every American will be entitled to during retirement. The development and deployment of a federal Retiree's Bill of Rights for all employees is a key step in assuring dignified, secure retirement for all Americans. United Nations Secretary General Ban Ki-Moon has observed that "Our views on what it means to be old are changing all the time. Where older persons were sometimes seen as a burden on society, they are now increasingly recognized as an asset that can and should be tapped." Unfortunately, however, those at or approaching retirement age are often treated badly. The Connecticut Commission on Aging reported that "21% of mature workers (50 and over) reported they have experienced discrimination or unfair treatment in the workplace." To combat such unfair practices, the Commission "proactively pursues innovative and effective strategies that help improve older adults' quality of life." Recently, the Connecticut-based Aetna Retirees Association has been working with U.S. Representative John B. Larson, a Democrat who represents Connecticut's 1st Congressional District, to develop a national retiree bill of rights that would clarify and protect pension and health benefits for all retirees. A movement to protect retirees' rights is also afoot in Kansas, where current trends indicate that by 2030, the single largest segment of the population will be people older than 75. The University of Minnesota became a pioneer in the retiree-rights movement when in 1998, the University Senate passed a resolution entitled "Faculty Retirees' Bill of Rights." Today, there is great demand from many diverse groups for Bills of Rights that protect their special interests. The nation's retired are the largest of such groups, however, and in the greatest need of protection. We have asked each of the presidential candidates to tell us what steps he would take to strengthen retirement security. When we receive their comments, we will post them on this web site. Meanwhile, however, we would like to solicit your participation in the development of a draft for this Retirement Bill of Rights. Please send us your ideas, and working with our colleagues at the American Retirement Security Coalition and the American Retirement Security Coalition Political Action Committee, we will promote this new plan through aggressive educational and political action initiatives. Everyone who contributes to the development of the plan will, of course, receive full credit for his or her efforts. Please contact me (aec@hgk.com) with your observations, comments, and suggestions as soon as possible. Thank you.
President
When the Good Pensions Go Away: By Thomas J. Mackell, Jr., Ed.D.
Thomas Mackell's new book is all about being able to retire with dignity and security, and how we can collectively staunch the assault on our nation's retirement system. He observes that the major contributors to today's retirement crisis include:
Dr. Mackell observes that "The volatility of the market is an indication that the 401(k) plan doesn't work. We will witness a tsunami in global markets once the German banks reveal how much they have invested in mortgage-backed securities. Ten years from now the American president will have to admit the need to infuse a substantial amount of money into the government supported system to prevent citizens from living under bridges." To protect yourself from a financial meltdown upon retirement, he suggests that all Americans:
As Chairman of the Federal Reserve Bank of Richmond, Chairman of United Benefits and Pensions Services, Inc., and President of the Association of Benefit Administrators and editor of its newsletter, Insights, Dr. Mackell is exceptionally well qualified to address this subject. In addition to being active as an advisor and consultant in the employee benefits field, he is also a member of the Board of Directors of the Inter-American Dialog and a director of the Foundation for Fiduciary Studies. He was a White House appointee to the ERISA Advisory Council to the Secretary of Labor from 1997 through 1999. Dr. Mackell's book is available through Amazon (www.amazon.com) or through your local bookseller.
April 29, 2008
With regard to retirement income, the generation of currently retired people may have it easy compared to the generations that follow. One study shows that nearly 45 percent of households are at risk of not having enough money to maintain their current standard of living at retirement. The U.S. savings rate is near zero. Many people have almost nothing in savings for retirement - a particular problem if they also do not have a retirement plan. Future retirees who do not have a defined benefit plan or defined contribution plan may be forced to rely on Social Security income alone - and this means a lower standard of living. DBPs are going away in favor of DCPs - the latter generally a 401(k) plan. Many people have less than $60,000 in 401(k) funds at retirement - a woefully inadequate source of retirement income when the average life span is increasing. People at lower income levels often make poorer 401(k) decisions than higher income folks with 401(k)s, resulting in lower portfolio returns and a lower pool of future retirement funds. Full retirement payouts under Social Security are moving to age 67 for those born in 1960 or later, meaning many will have to work longer to get full Social Security benefits (and paying in for additional years and likely on larger base salaries). Social Security may be re-indexed such that annual increases will be at lower levels than in the past - meaning slippage in real income if Social Security is the primary source of retirement income. Medicare cost increases will increase faster than Social Security increases resulting in relatively lower Social Security income streams. Many people in the 50 to 55 age group who can see retirement coming realize they have neither put enough away on an annual basis nor have started saving for retirement soon enough. The result is that many cannot retire when they had planned and must work additional years. Inflation may increase faster than retirement income resulting in a lower standard of retirement living. Many retirement plans do not come with guarantees of annual increases, or increases that at least match cost of living increases, leaving the potential for lower real retirement income. Many public and private retirement plans are woefully underfunded and may not have made investment decisions that match growing retirement obligations. Some of these public and private retirement plans could go bust or be forced to cut back payouts to retirees. F.C. "Ted" Weston, Jr. is a professor emeritus in computer information systems at Colorado State University. Copyright (c) The Coloradoan. Reproduced with permission.
New HGK Yearbook Number VIII Available NowThe latest HGK Yearbook has just come off the press and is available now by request.
To request your copy, please contact: Arthur E. Coia II -- or – Martin J. Maddaloni, Jr. HGK Introduces the American Retirement Security CoalitionWe are proud to announce that HGK has created a new organization, the American Retirement Security Coalition (ARSC), which will continue and expand on the work originally undertaken by the Society of Defined Benefit Plan Professionals.
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