As the traditional system for ensuring retirement security continues to fray, and ever more rapidly, it is vitally important to fight to preserve these rights.

Retirement security has three components: 1) Social Security, which must be preserved, 2) Personal savings, which should be encouraged, and, 3) Traditional pensions, which have faced significant challenges.

Social Security

• Social Security is one of the most successful government programs in American history, dramatically slashing the poverty rate among seniors from 35 percent to 10 percent between 1959 and 2003.
• More than half of the elderly rely on Social Security to provide the majority of their post-retirement earnings.

Personal Savings

• The personal savings rate for Americans is negative, with Americans spending $134.2 billion more than they could afford in December 2006 alone.  Workers can barely make ends meet, let alone save for retirement.

Pensions

• Traditional, defined-benefit pensions have been under pressure for more than 20 years. Less than half of all workers participate in any kind of workplace retirement plan, with even less (37 percent) participating in a traditional pension plan. In contrast, just 25 years ago, 88 percent of workers were covered by a traditional pension plan.
• These traditional pensions, which, along with Social Security, provided generations of American workers with a solid base of security in retirement, have been almost entirely replaced by 401(k) plans that provide no guaranteed income.

All three elements of retirement security are critical, but it is the decline in pensions that is the most troubling. Studies have shown that the decline in enrollment in workplace pension plans is a reflection, in large part, of the decline in union jobs with American manufacturing companies.ⁱ  The message is clear. Good jobs and domestic manufacturing are crucial if retirement security is to be shored up in this country.

Sources: AFL-CIO Retirement Security Facts and Stats; U.S. Social Security Administration; U.S. Bureau of Economic Analysis; Economic Policy Institute; Coming Up Short: The Challenge of 401(k) Plans, Center for Retirement Research, Boston College
 

ⁱ Munnell, Alicia and Annika Sunden, Coming Up Short: The Challenge of 401(k) Plans, Center for Retirement Research, Boston College (2004)

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