Andrea Germanos at Common Dreams writes—Inequality Soars as Retirement Benefits Dwindle for All But the Rich:
A report released Thursday from the U.S. Government Accountability Office (GAO) offers more evidence that the shift away from traditional pensions to 401(k)-like plans contributes to inequality.
As Bloomberg reported Friday, "The U.S. retirement landscape is starting to look like a Charles Dickens novel."
These "defined contribution (DC)" plans, the report notes, "have become the dominant form of retirement plan for U.S. workers," but 60 percent of all U.S. households in 2013 had no retirement savings in one. Further noting the wealth divide, GAO found:
- While 81 percent of working, high-income households had savings in a DC plan, only about 25 percent of working, low-income households had any savings in one.
- From 2007 to 2013, the average balance in such accounts held by white working households didn't significantly change, but for black working households, the average balance in plans dropped significantly—from $31,100 in 2007 to $16,400 in 2013.
Further, as noted by GAO:
According to GAO's projections, households in the lowest earning group accumulated DC savings that generated lifetime income in retirement, as measured by an annuity equivalent, of about $560 per month on average (in 2015 dollars). Yet, 35 percent of this group had no DC savings at retirement. In contrast, households in the highest earning group saved enough to receive about 11 times more per month in retirement and only 8 percent had no DC savings.
A 2013 paper from the Economic Policy Institute showed how this shift away from traditional pensions to 401(k) retirement plans has been a "disaster," fueling inequality and creating more insecure retirements.
Economist Dean Baker also noted in December that "Your retirement prospects are bleaker than ever," attributing it to "the disappearance of traditional defined benefit pensions and the failure of 401(k)-type plans to fill the gap."
"The vast majority of Americans who expect to retire in the next decade can count on little income other than their Social Security. This is true not only for low-income workers, who have struggled most of their lives, but also for millions of middle-income workers," Baker wrote. "Although Social Security is a tremendously important program, and provides a solid base that retirees can depend upon, its $16,000 average annual benefit doesn't go very far. Many if not most can expect to see sharp reductions in living standards."
And A Tale of Two Retirements, a report released last year by the Center for Effective Government and the Institute for Policy Studies, showed that 100 Fortune 500 CEOs'' retirement assets together totaled $4.9 billion, the same amount as that held by 50 million families—41 percent of American families—combined.
"The 401(k) revolution has been a disaster, yet some policymakers are calling for cuts to Social Security, which will be the only significant source of retirement income for most Americans—if they are able to retire in the first place," said A Tale of Two Retirements co-author Monique Morrissey.
Hillary Clinton said last month that "[Republicans] are calling Social Security a Ponzi scheme and want to privatize it," while both she and Democratic rival Bernie Sanders "want to make sure Social Security is vibrant and well-funded." Her current views on the issue, Max Ehrenfreund wrote last week at the Washington Post, reflect a shift towards the left, more in line with Sanders' view.
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At Daily Kos on this date in 2007—How Late is Too Late?
Having always been extremely interested in Daily Kos demographics, let me ask you: How forgiving are you willing to be? What's your timetable on Republicans coming down the rat-lines off the USS Bush?
I'm not talking about the practical side of things, the we'll-take-your-votes-if-it-leads-to-a-veto-proof-majority pragmatism.
What I'm asking is: If a Republican (or Democrat) finally comes around in September and says the U.S. needs a timetable for withdrawal, does that wash away for you what will by then have been that person's five-and-a-half-years of parroting the Administration's war hype, backing the war and the occupation and downplaying all the rottenness, from Gitmo to Abu Ghraib, from Anbar Province to the Walter Reed Annex, from the secret prisons of Thailand to the secret machinations of the Defense Policy Board?
Will you, in the deep recesses of your tolerant liberal heart forgive them and count them on "our side" if they come around in, say, January 2008, before the primaries? June? September? What's your timetable?
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