We Can No Longer Ignore the Retirement Crisis

Over half of Americans worry they will run out of money when they’re no longer earning a paycheck. Nearly two-thirds wish they had started saving earlier. So, how are older Americans addressing the retirement crisis?  For many, by working into their old age. Increasingly, more and more seniors find they are unable to support themselves with Social Security and savings. Sadly, only 10 percent of retirees between the ages of 62 and 70 report being financially stable.

Theresa Ghilarducci, professor of economics and policy analysis at the New School for Social Research in New York, argues in her new book, “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy”,  working longer will not by itself solve the crisis so many retirees face.

Though not the case for all, many who continue working in their golden years do so in lower paying jobs and not in their previous career field. This does not ensure financial stability.  And, it ultimately delays the ability of many younger adults to move into the labor market.

For most Americans, they will rely on capital markets and investments to secure a comfortable retirement.  It’s no secret that a solid retirement is a much harder proposition than it was 30 years ago, but, as aptly put by Larry Fink in his annual Chairman’s letter to investors, “capital markets can provide it – so long as government and companies help people invest.”

Shoring up Social Security could help many retirees, but what about those police, firefighters, teachers, and other public servants who do not receive those benefits? For those retirees, a sound, secure pension is the only answer.

Professor Ghilarducci advocates for a new automatic-enrollment pension plan, a bold idea she calls the “Gray New Deal”. Legislation like the Retirement Savings Act would create such a plan, but like state sponsored pensions, it is important to allow market principles to drive investment decisions.

Any pension plan that is influenced by political ideologues allows for financial insecurity and instability.

The best way to address the current retirement crisis in America is through secure, well-managed retirement plans free of politicization – not by ignoring the retirement crisis that is leading far too many Americans to work longer at lower wages.