Got to Help Yourself

Richard Quinn

AT THE END OF EACH month, my pension arrives in my bank account. I can count on the same amount every month. It’s comforting.

In the old days, nearly 50% of working Americans had pension benefits. But it was never more than that. For most workers, the three-legged stool really only had two legs, Social Security and personal savings. Today, 76% of state and local government workers have a pension plan, versus just 12% of private sector workers. No matter how you slice it, most Americans are on their own when it comes to retirement savings.

There are several reasons traditional pensions have disappeared in the private sector. They’re expensive to fund and administer. They create large long-term liabilities for companies. Maybe most important, they only provide value to long-term employees. My pension is based on working for the same employer for nearly 50 years. That sort of tenure is highly unusual. In fact, private sector tenure of even 10 years was never common in any generation and, when it did occur, it was concentrated in large companies and certain industries, typically those that are unionized.

Given the disappearance of pensions, it’s no wonder so many retirees rely heavily on Social Security. But what’s curious is why we have a crisis when it comes to retirement savings. After all, to help those without pensions, we’ve had IRAs since 1974 and 401(k) plans since 1981. To be blunt, too many workers in the last half-century have put spending ahead of saving. And, yes, all but the poorest among us can afford to save—if we make it a priority and we make the necessary sacrifices.

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