Streams

DIY Retirement Savings Isn't Working

Friday, May 09, 2014

retirement banner (flickr: Michael Wade)

James W. Russell, retirement policy activist and the author of eight books, including Social Insecurity: 401(k)s and the Retirement Crisis (Beacon Press, 2014), argues that the switch to 401(k) plans from traditional pensions leaves workers without secure retirement plans.

Guests:

James W. Russell

Comments [26]

JerseyJazz from Bergen County, NJ

With all due respect, I question the idea of baby boomers on easy street. Many boomers are working well into their 60s, and others wish they were working because they can't find jobs after being laid off in the past few years. Lots of younger boomers still have kids in college; older ones often have very elderly parents who need their support; and many are paying at least part of the health care costs for selves, offspring, and parents.

From where I sit, the only non-CEO-level folks who can count on old-age security are public workers. Most can retire in their 50s with defined benefit pensions and generous health coverage until at least age 65.

May. 09 2014 05:22 PM
John from NYC

Another book on this topic is "Retirement Heist" by Ellen Schultz

May. 09 2014 11:55 AM
thatgirl from manhattan

Retirement? Hahahahahahah!

None for anyone who comes after the Boomers; we'll work until we're dead.

May. 09 2014 11:53 AM
Joyce from NYC

Hey -- some truth here --
Interest rates are being held artificially low so that the Federal Gov can go on a borrowing binge, and to bail out the banks, and to pump steroids into the economy to cover for the anti-growth policies of the current admin.

WHO LOSES?

Those who have pension savings -- they are no longer growing.

May. 09 2014 11:47 AM
Lenna from UES

I don't know one person that retired solely on a 401k plan. Oy.

May. 09 2014 11:47 AM
Cynthia from East Harlem- work

401(k) great as a third leg of the stool - but on its own - please!!!! And I sorry but where are we supposed to find 10-15% to put away when housing costs are far from the 25-30% ideal - I am doing 8% now and my rent is currently 50% of my take home. The off handed way people just say to do this is mind-boggling.

I am lucky - I will get a Defined (traditional) Benenfit Plan from my old job, Soc Sec and my current 401(k) plan. I hope it will be enough but at least I have some sense of security. Also if you retire just before a "crash" ok - but just after Oh Well. Think of the Eron employees who's retirement plan was the company stock. You cashed out(retired) the week before that fiasco you were fine. The day after - NOTHING!!!

May. 09 2014 11:46 AM
David from Manhattan

Brian why do you guys keep talking about how much better the pension is/could be? It's over and not being offered to most people anymore. What can, should we be doing NOW?

May. 09 2014 11:45 AM
Barb from in town

There may be "a lot of reforms that could be done" but we have a dysfunctional legislature where (1) a small group selfishly refuses to do any work or let anything get done because they think it will give them a political advantage, and (2) another group is in thrall to a market-based, trickle-down, advantage-the-rich economy.

SO…whether or not there are a lot of reforms that "could" be done, they won't be done and we're all getting screwed by these bad actors.

May. 09 2014 11:44 AM
Jack from Manhattan

Is it any wonder that more and more people are looking to retire in places like Central America? The demise of the American economy is reflected in so many ways.

May. 09 2014 11:43 AM
thatgirl from manhattan

Pension?? Hahahahahahah!

Boomers will be the last generation to have anything closely resembling "retirement income" from pensions, 401Ks and overall high-earning salaries. Everyone after them has seen their income stagnate, making saving near-on impossible--given the lack of regulated rental housing and overall cost of living here.

May. 09 2014 11:42 AM
Michelle

Pensions are far from safe. How many companies have gone out of business leaving people with pennies. No system is perfect, we need to save our acorns for the future and keep the foxes from the hen-house, something we forgot from the fairy-tales.

May. 09 2014 11:42 AM
Charles from Downtown

What about the fees a 401K account charges?

May. 09 2014 11:42 AM
John from New Jersey

With all the concern with about having enough money for retirement, why is there no responsibility be taken by the government for all the money that people lost in the 401Ks as a result of the Financial crisis? For many people this represents an very significant amount of money lost. Where is the accountability for this tragedy?

May. 09 2014 11:41 AM
Maggie

One change that would help retirees with 401(k)s is the way withdrawals are taxed. although over time the bulk of the money in a 401(k) is a result of growth of investments, withdrawals are taxed as income as if from employment, which is to say at a much higher rate thanif it were taxed as Investment income.

May. 09 2014 11:41 AM
gregb

You need to save 15% total year for retirement- 10% if Social security pays well, 15% if you are going it alone. Here is a simple explanation.

http://www.genuineideas.com/ArticlesIndex/pension.html

The key is a low cost stock fund and not panicking during downturns

May. 09 2014 11:40 AM
John

With all the concern with about having enough money for retirement, why is there no responsibility be taken by the government for all the money that people lost in the 401Ks as a result of the Financial crisis? For many people this represents an very significant amount of money lost. Where is the accountability for this tragedy?

May. 09 2014 11:40 AM
rz from Uptown

I'm 30 years old. I have never been offered health care, 401K, or any other form of benefit. I have been employed as a full-time employee, freelancer and recently primarily as an independent contractor. I have no faith that social security will be there for me in 40 years time.

I was told all through my youth: "Work hard and you'll get ahead" - I seriously question the validity of that statement.

May. 09 2014 11:40 AM
Amy from Manhattan

A "modest" income of "only" $60,000 a year? That's almost twice the median income!

May. 09 2014 11:40 AM
John from NYC


Let's not forget the infamous Cash Balance retirement plans. This type of retirement plan was instituted by IBM and taken back by that firm.

http://www.washingtonpost.com/wp-dyn/articles/A49863-2004Dec8.html

May. 09 2014 11:39 AM
Sammy from Manhattan

I'm sorry, I am far from a shill for the "other-side" but a lot of the deregulation and looking the other way has occurred under Democratic administrations. They are truly both to blame, and both are bringing in huge money from these groups. To try to turn this into a D vs R issue is ridiculous. One just says something and does the other, but they are just as complicit.

May. 09 2014 11:37 AM
antonio from bayside

I work for a private company which strangely has a pension AND a 401k.

Question. Aren't both dependent on the market?

May. 09 2014 11:36 AM
Bob from Westchester

The original concept for the 401(k) savings plan was to encourage individuals to save to supplement traditional defined benefit pension plans, NOT replace them. This apparently got lost when the financial industry saw how much money it could make, and the corporate employers saw a way to unload the future risk and responsibility.

May. 09 2014 11:35 AM
Barb from in town

This is just part and parcel of the GOP Market-Fixes-All theology, which holds that you're on your own in the market place and it's up to you to play the game so you can take care of yourself (notwithstanding that the tax laws, labor laws, etc., favor the wealthy and hurt the little guy).

One of the many, many problems we're facing now that trace back to Republican policies.

May. 09 2014 11:33 AM

Don't forget the pension plans that were scooped up as assets in the 70s/80s & the Enron-style pension grabs.

A limited 10% of retirement funds in company stock is one control, the other is to make sure the other 90% is in low/no fee index funds for stocks/bonds/etc.

May. 09 2014 11:01 AM
BocaRatso from Boca Raton, FL

Save for your retirement...
Save for your medical care...
Save for your kids education...
Save for possible unemployment...
..and don't forget to spend to help stimulate the economy.

The problem is the entire system.
Killing pensions removed one safety net. The others are fraying fast.

May. 09 2014 10:11 AM
Brandon from Manhattan

The main problem here has been the Federal Reserve (and a poorly regulated Wall Street which began deregulation in the 90s). By constantly inflating the next bubble over the past 20 years and punishing savers with below normal interest rates (look up the term economic repression) they have forced people into riskier and riskier assets in order to get any income. At the same time, their balance sheet is now a ticking time bomb, like our own Federal govt and many local ones as well - this is why we are under economic repression.

May. 09 2014 09:44 AM

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