by Jon Melegrito | January 17, 2012
A story in Friday’s Washington Post notes that older American workers increasingly are choosing to keep working out of a growing fear that they will be unable to support themselves in their later years. What’s largely to blame? The shift from secure employee pension plans to riskier 401(k) plans.
Citing Bureau of Labor statistics and studies by the Center for Retirement Research, the Post notes that between 1983 and 2007, the proportion of workers covered by a traditional pension plan dropped from 62 percent to 17 percent, while the percentage of workers covered only by defined contribution plans such as 401(k)s jumped from 12 percent to 63 percent. “This shift puts the burden of saving and investing for retirement on workers, and many were unable to do so,” adds the Post.
This finding confirms what AFSCME has been saying for years. “Our current retirement programs, based on individual accounts such as 401(k) plans, are a failed experiment,” Secretary-Treasurer Lee Saunders points out. “Individuals who have been left on their own to save for retirement in 401(k) accounts face challenges that are not being met.”
AFSCME has always maintained that pension systems are an irreplaceable source of economic security. “They have fared much better than individual ‘you’re on your own’ retirement accounts,” says Pres. Gerald W. McEntee. “America has now three decades of experience with the defined contribution 401(k) system. The results are discouraging. Americans need more retirement security, not less.”
Graphic by The Washington Post