General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsRetirement Insecurity: A Problem that Needs a Solution (so here’s one!)
Jared Bernstein
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Heres the basic lay of this troubled landscape: First, based on long-term wage erosion, low savings, and the shift from defined benefit (DB) pensions to defined contribution pension plans (DC)see figurethere are a lot fewer people who will reliably be able to replace enough of their lost earnings when they retire. DB plans guarantee a pension benefit; DC plans are individual retirement accounts that fluctuate with the markets; thus, the figure shows the locus of risk in retirement security shifting from employers to workers.
Second, some pension plans held by public workersand thus a liability for their public sponsors, like municipal governmentsare in trouble, often due to a collision of irresponsible funding practices and the Great Recession. Though cases facing potential defaults dominate the headlinesincluding todaysthey are the exception. Yes, there exists a serious funding shortfall in many public plans, but no, that doesnt imply the need for massive restructuring, benefits cuts, and defaults. In fact, on average, states, cities, and towns devote less than 5% of their operating budgets to funding their pensions.
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A far bigger problem is the fact that too few of todays workers have any sort of pension at all. Half of private sector workers do not participate in any retirement savings plans, and as youd expect, participation is a function of your wage level. For low-wage workersthose in the bottom 25% of the wage scale20% participate in plans; for those in the top 25%, its 75%.
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So scholars and advocates are thinking about ways to cover a lot more people, and a bit of a consensus is forming around a hybrid between DBs and DCs that involves pooling over large numbers of workersas with health care reform, pooling risk is the best way to dilute it. Heres the way something like this might work:
state or federal governments would set up public pension plans that guaranteed a modest returnmore of a supplement to Social Security than a DB replacement (as the latter could place new, large liabilities on the public sector) in which all workers could participate. In other words, the plan would be organized and managed by the state or federal sector, as they have by far the greatest capacity to pool and manage large plans; but any employee, not just public sector workers, could participate.
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http://jaredbernsteinblog.com/retirement-insecurity-a-problem-that-needs-a-solution-so-heres-one/
CAPHAVOC
(1,138 posts)No retirement. Work til you die.
"No retirement. Work til you die."
...free to do that.
I like to work. Retirement is boring.
"Plan to. I like to work. Retirement is boring. "
..are you one of the anti-Social Security people, the ones who think it's a ponzi scheme?
Do you think everyone should be like you and work until they "die"?
ProSense
(116,464 posts)going to answer? See, I don't know any Democrat, even a conservative one, who believes the solution is to "work til you die."
La Lioness Priyanka
(53,866 posts)La Lioness Priyanka
(53,866 posts)but if it does, i really hope you have the sense to realize why we have to have some program in place to prevent people from destitution
marybourg
(12,648 posts)suddenly at a fairly young age and while your industry is similarly healthy. Doesn't work that way for most people. You'd better have a plan B in place if that's your plan A.
CAPHAVOC
(1,138 posts)I already have SS. But still want to work. I like it.