Sustainable Retirement: Who's going to be a millionaire?

Like so many of my fellow baby boomers,  I grew up hearing the word "pension" and had a vague notion that is was money my dad would get when he stopped working. The generation that fought in World War II came home to industrial jobs that involved hard work and good wages. The word "retirement" evoked a wistful sigh of anticipation and all Americans agreed that these hard working men and women had earned the right to hang out the "gone fishin'" sign. My parents didn't worry about their retirement income. They hoped and prayed for enough good health to enjoy a long, comfortable retirement.

When did the idea that "retirement with dignity" change? When did retirement become a privilege, not a right?  When did we stop hoping for good health and long life when our working years were over and start wondering if we could ever stop working?

And why do we now think that privatizing risk makes sense? Sadly, my dad never collected his pension, succumbing to cancer in his early 50s; but he was part of an enormous pool of workers and his early death contributed to the actuarial calculations that provided balance and security for others who were more fortunate.  Shared risk works.

These days defined benefit plans, the "pensions" from my dad's generation, have become an anachronism at best.  A powerful business case is presented in Truthout's The Case for Defined Benefits and Retirement Security. After decades of companies shifting their long term pension plans to defined contribution plans, all 76 million of us Boomers are in trouble.  According to a  National Conference of Public Employee Retirement Systems (NCPERS), 75% of voters are worried about retirement with 42% very worried. And we should be.  According to the Employee Benefits Research Institute (EBRI), the average American has a retirement savings deficit of $48,000, with an aggregate national savings shortfall of nearly $4.6 trillion.

As taxpayers look for ways to shore up state coffers; public employee retirement plans are now under attack in what seems like a race to the bottom.  Rather than working together to re-imagine a society where average working people, like my dad, could count on a comfortable retirement, as long as they were blessed with good health; private sector employees who have lost their retirement are rallying against the last stronghold of real retirement security, public pension plans.

A few random facts:

• Every $1 spent on public pension funds returns about $2.50 to its local community
• The average American age 55-64 has $98,000 set aside for retirement; even though it will take $1.25 million in savings to provide $50,000 in lifetime retirement income
• About $4 trillion in retirement plan equity assets were wiped between 2007 and 2008
• There are 80 million Millennials, with an even larger savings gap

Rather than clamoring for retirement security for all, using public plans as an example of what our parent's generation expected from their private employers, it seems that public pension plans (not to mention the teachers, firemen, police officers and others who make our communities safe and strong) are increasingly under attack.

As someone who has never worked in the public sector, I just don't get it.

As a person with training and experience in finance, I still don't get it.

Apparently Professor Theresa Ghilarducci from the New School for Social Research doesn't get it either, as she explains in her recent Op-Ed piece Pension Funds for the Public.

The three-legged stool of retirement security; social security, pensions and personal savings is broken.  One alternative being proposed is a Secure Choice Pension that would spread risks and costs for private employees and bring back the real pensions that our parents' generation counted on.

Rather than encouraging further erosion of public pension funds and engaging in this "race to the bottom"  that is sure to create future problems for all those who hope to retire; perhaps we should take a closer look at the few remaining examples of plans that uphold the rights of all people to retire with dignity.

Do we really want to live in a society where no one can afford to retire?