It seems as though there was no real transition from employers providing pension plans, to consumers being forced to save up for their retirement pretty much on their own.
New York, NY (PRWEB) June 24, 2013
FinanceSpectrum.com financial advice website today responded to an article published on June 24th 2013 in the New York Times by Nancy Folbre, which highlighted the danger many U.S. consumers are in of not being financially prepared for retirement.
In the NYT article, Folbre reported that the National Institute on Retirement Security recently revealed in a new report that roughly 45% of all working-age households do not have any retirement assets, such as an IRA or 401(k). Additionally Folbre stated that 2/3’s of working households between the ages of 55 and 64 with at least one earner haveless than one year’s income worth of retirement savings. According to Folbre, employers have largely done away with pension plans that consumers have long relied on to support themselves in retirement. She wrote that Iowa Democrat Senator Tom Harkin has proposed legislation that would put responsibility back on businesses to provide pensions without forcing individual employers to shoulder all the risk.
FinanceSpectrum.com believes that there needs to be some sort of shift in the way Americans are preparing for retirement, and took a stand behind Harkin’s reform legislation. FinanceSpectrum.com is quoted as saying, “It seems as though there was no real transition from employers providing pension plans, to consumers being forced to save up for their retirement pretty much on their own. Harkin refers to the three-legged stool of retirement security as being incredibly wobbly these days. Previously, retirement was made up of pensions, personal savings, and Social Security but now that pensions are disappearing, consumers are required to save a ton more—on their own—and it’s something our country is clearly struggling with. We are big advocates in Senator Harkin’s plan to reintroduce pensions but without major risk to the individual employers. It would be a win-win for everybody.”
According to Sen. Harkin’s legislation, “A strong and vibrant pension system is a core component of a secure retirement. However, the pension system has been in decline for decades, and businesses are reluctant to provide new pension benefits to their employees…It is time for a new approach—USA Retirement Funds. People participating in a USA Retirement Fund would earn a benefit paid out over the course of their retirement, with survivor benefits, like a pension. The amount of a person’s monthly benefit would be determined based on the total amount of contributions made by, or on behalf of, the participant and investment performance over time.” Senator Harkin’s.
The above NYT article reported that in 1991, 11% of workers expected to retire after age 65, a number that went up to 19% in 2000 and 33% in 2010. Americans are finding themselves working longer to keep health benefits and salaries due to not having enough in savings to support a retired lifestyle. This adversely affects younger generations who are waiting in line for the seniors to retire and jobs to open up, as well as young families who might be forced to financially help support their ill-prepared retired parents. On the flip side, companies like life insurance could be affected in a different way, since life insurance needs are typically greatest when spouses are working full-time. In retirement it typically will not affect the ability of one spouse to survive comfortably if the other passes, since there is already no salary income to speak of. Insurance businesses such as Globe Life Insurance Company, GEICO, or MetLife could see the effects of people pushing retirement further and further back as policyholders delay cancelling or lessening the coverage on their policies.
FinanceSpectrum.com applauded Senator Harkin for his retirement legislation efforts and urged Americans to begin thinking seriously about retirement issues that the U.S. is currently struggling with.
FinanceSpectrum.com is an online finance advice column whose articles are intended for the every-day American consumer to provide insight, tips, and education on all topics related to finance. FinanceSpectrum.com reports on relevant topics like current events, investing, retirement planning, and paying down debt.