U.S. Ranks 19th On Retirement Security; California Is Even Worse Off Than The Nation

U.S. Ranks 19th On Retirement Security

California Is Even Worse Off Than The Nation

By Mike DeBord, Co-Chair, CRCEA Retirement Security Committee

First the bad news! According to Natixis Global Asset Management, the U.S. barely ranks in the top 20 countries in terms of overall “Retirement Security”. America has held the lowly 19th rank for 3 straight years, just above Slovenia and behind the United Kingdom, Republic of Korea, Czech Republic, Canada, Iceland and many northern European countries.

In their study, “Quality of Life”, largely measuring well-being of individuals, the U.S. doesn’t even make it to the top 30. Income inequality is a big factor in the Natixis measure of well-being, and John Hailer, President and CEO of Natixis said “that is what sank the U.S.

Now the even more distressing news! The U.C. Berkeley Labor Center, in their research, found that access to workplace retirement plans in California’s private sector is inadequate and declining. Their 3 year study found that only 45% of private sector workers age 25-64 in California work for an employer that even sponsors a retirement plan—much less than the U.S. average of 53%. And within California, only 37% of private sector workers actually participate in their employer-sponsored retirement plan. California also has the nation’s highest poverty rate in the Country at nearly 25%. So clearly, California (the 5th largest economy in the world) is not doing better than the nation on these important issues.

In California, there has been a downward trend in workplace retirement coverage since 1998-2000 when 50% of private sector workers had access. More specifically, access is the worst among low-wage workers who work for firms with less than 100 employees. More than 6.3 million California private sector workers currently do not have access to employer sponsored plans including a disproportionate percentage (64%) of these workers being people of color.

It’s been a generation now since the shift from traditional pensions (defined benefit plans) to mostly self-funded 401(k) savings plans (defined contribution plans) and fewer workers than ever are setting aside what they need for their retirement. Employers aren’t contributing enough to the plans and employees aren’t saving enough (50% of American workers aren’t saving anything for their old age).

Many workers that have undersaved for retirement use the excuse that they’ll work forever. That’s not realistic and not always up to them, said Greg McBride, senior vice president at Bankrate.com. “That’s the point where it can reach a crisis at the household level.” With 10,000 baby boomers turning 65 each day, the U.S. retirement crisis is here and growing rapidly. Sadly, each generation is now projected to retire poorer than the last.

Even with all these facts, “pension reformers” continue their efforts to destroy all remaining public defined benefit plans and the retirement security they provide. If they are successful, the race to the bottom will be realized. America needs to change course and we need to be involved in that change!

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