Monday, May 16, 2005

Retirement Insecurity

Retirement Insecurity

Americans today face a growing uncertainty about their retirement security. Economists and financial planners have long compared retirement security to a three-legged stool comprised of Social Security, employee pensions and personal savings. Under the current administration all three are under attack or in jeopardy. Whether it's the president's plan to privatize Social Security, the decreasing reliability of pensions or the growing middle-class squeeze, now more than ever, Americans are facing retirement insecurity.

* Leg One - Social Security is under attack. President Bush's plan to privatize Social Security will cut benefits for millions of Americans, including those who can least afford it. According to the Center on Budget and Policy Priorities, under Bush's plan, by 2055 middle-class workers would see their benefits cut by 87 percent. Medium earners would see their benefits cut by 66 percent.

* Leg Two - Guaranteed pensions are no longer guaranteed. It used to be that pension plans offered workers guaranteed security in their retirement. In many cases, employees deferred raises in favor of their pension plans. But today, the nation's private pension system is falling apart. More and more companies are defaulting on their pension plans, putting millions of Americans at risk. And the Pension Benefit Guaranty Corp, the government insurer that is supposed to guarantee workers some benefits if their company goes under, is facing a deficit of nearly $30 billion.

* Leg Three - Personal savings decrease as the cost of living rises. Rising health care costs, rising gas prices and stagnant wages are forcing American families to reduce the amount they save. The average saving rate for Americans was below 1 percent this year, compared to the 12.3 personal savings rate in the 1950s. The value of the minimum wage is down; unemployment is up; and more Americans have fallen into poverty.