by Joye Barksdale | February 21, 2013
For years, ultra-conservative politicians have been peddling the lie that 401(k)-type defined contribution retirement plans provide as much security as traditional pensions. Meanwhile, AFSCME working members and retirees argue that these politicians are imperiling the future of millions of seniors.
A recent front-page Washington Post article, “Fiscal trouble ahead for most future retirees,” provides more evidence of what AFSCME has known for a long time: Defined-contribution plans are one reason the security retirement of many future retirees is in jeopardy.
“For the first time since the New Deal,” the article says, “a majority of Americans are headed toward a retirement in which they will be financially worse off than their parents.”
A U.S. Senate report says our nation faces a retirement savings deficit of more than $6 trillion – about $57,000 per household. Other studies indicate that more than half of Americans 30 and older won’t be prepared for retirement. That’s partially because those with 401(k) plans will end up dipping into their savings for a variety of purposes – from health care expenses to college tuition.
“This is the first time that Americans are going to be relatively worse off than their parents or grandparents in old age,” said Teresa Ghilarducci, director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research, in the article.
The Great Recession played a major role in undercutting retirement security, and destroying 40 percent of Americans’ personal wealth. On top of that, many employers have shifted from defined-benefit plans to defined-contribution plans. But rather than seeking ways to increase retirement security, many politicians are focused solely on the nation’s long-term debt and are willing to sacrifice Social Security and Medicare to fix it.
That’s why AFSCME members across the country – from New York to California – have been fighting attacks on retirement security. As U.S. Sen. Tom Harkin (D-IA) said in a recent hearing on the issue, “We need to do more to help American families cope with this looming crisis.”