From the summary:
The stock market crash of 2008 significantly dimmed the retirement prospects of workers approaching retirement. These workers are heavily dependent on 401(k) plans, as opposed to traditional defined benefit pensions, as a source of retirement income. During the economic downturn, these plans lost about one-third of their value. Even before the crash, many older workers lacked the assets needed to enjoy a comfortable retirement.
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Source: Sally Hass, Steve Vernon, Benefits and Compensation Digest, Vol. 47 no. 1, January 2010
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Letting employees "downshift" toward retirement can help them improve work-life balance, while allowing employers to retain valuable skills longer.
Source: Paul Fronstin, Employee Benefit Research Institute, Issue Brief, no. 338, January 2010
Health insurance reform legislation pending in Congress would have a mixed impact on retiree health benefits, according to a study published today by EBRI. In the short term, some provisions of the legislation would help bolster early retiree coverage, while in the longer term other provisions could create significant incentives for employers to drop retiree coverage.
See also:
Press release
Source: Larry Frolik, University of Pittsburgh Legal Studies Research Paper No. 2009-34, November 14, 2009
From the abstract:
America's retirees are faced with a potential financial disaster. Economic security in retirement has long depended on Social Security, private savings and employer provided retirement plans. While much attention has been paid to the financial problems of Social Security and the lack of private saving for retirement, little attention has been paid to an alarming development in employer provided retirement plans: the likely inability of retirees during the long years of their retirement to successfully manage their retirement funds accumulated in 401(k) and similar accounts. We as a society have set up a funding system for retirement that assumes retirees will be able to successfully manage their IRAs for the 20 or 30 years of retirement. We know, however, that most will not. Some will lack the basic intelligence or knowledge of finance take on the risk, oversight and planning. Some will be fine managing an IRA at age 65, but lose the ability due to physical decline. Finally, millions of aging IRA owners will lose the ability to manage their finances because of the lost of mental capacity, primarily because of dementia. Asking individuals to husband a lump-sum payout from a 401(k) retirement account for the 20 to 30 years of retirement as they physically and mentally decline is a recipe for disaster. Unless we provide a more secure way to stretch retirement dollars into the twilight of retiree lives, we can expect to see more and more elderly retirees slide into poverty. The solution is to create federally guaranteed life-time annuities that retirees can purchase with the funds accumulated in their 401(k) retirement accounts.
Source: Robert L. Clark, Center for State and Local Government Excellence, Issue Brief, November 2009
States with the lowest unfunded liabilities include North Dakota, Wyoming, Iowa, Oregon, Rhode Island, and Oklahoma; states with the largest include New Jersey, New York, California, North Carolina, Connecticut, Louisiana, and Texas. The brief finds that:
- Although there are wide-spread reports of a major fiscal crisis, the reality is that some states face a fiscal crisis while others do not.
- There are substantial differences in the total liabilities of state retiree health plans, depending on the generosity of the plan and the size of the public sector.
- Retirement benefits are not protected by state laws or constitutions, and public sector employers will continue to amend their plans to reduce costs.
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2008 version
From the summary:
Many data sources show a disparity among racial and ethnic groups regarding participation in and contributions to 401(k) plans. White workers participate at a higher rate and contribute a higher percentage than African American and Hispanic workers. However, few studies have explored whether these differences persist once other factors expected to impact these decisions are taken into consideration. One recent study by Ariel/Hewitt using client data found lower participation and contributions rates in 401(k) plans for African Americans and Hispanics than for Whites, even after controlling for age, tenure, and earnings. The question is whether racial and ethnic differentials remain after controlling for a broad or array of factors included in a nationally representative sample of households, the Federal Reserve's Survey of Consumer Finances (SCF)...
Source: Barbara Butrica, Philip Issa, Mauricio Soto, Urban Institute, November 1, 2009
The retirement savings of American households took a big hit when the stock market crashed in 2008. Recently, however, a good portion of these losses has been reversed. This fact sheet follows trends in retirement account balances since the beginning of 2005.
Source: PA Times, Vol. 32 no. 9, October 2009
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About 49 percent of the nations' cities, counties and townships expect less revenue in 2010, and 21 percent expect fewer employees, according to a new survey. About 26 expect increased consolidation of local services.
With shrinking budgets and fewer staff, local officials are taking several approaches to contain long-term costs associated with employee and retiree health care.
Source: Craig Copeland, Employee Benefit Research Institute, EBRI Issue Brief, no. 336, November 2009
Participation in employment-based retirement plans decreased by small amounts for most categories of workers in 2008, but those with the strongest connection to the work force experienced the smallest decline: 0.5 percentage point, according to a study released by the EBRI. Additional decreases are possible in 2009-2010, depending on economic trends, the study adds.
See also:
Press release
The brief's key findings are:
The National Retirement Risk Index (NRRI) shows the percent of households 'at risk' of failing to maintain their standard of living in retirement.
The NRRI jumped from 44 percent to 51 percent today due to:
- the bursting of the housing bubble;
- the stock market crash; and
- the ongoing rise in Social Security's Full Retirement Age.
Clearly, Americans need more retirement saving.
Union Strategies for Hard Times
by Bill Barry
What can unions do as the Great Recession ravages workers and their unions and threatens to destroy decades of collective bargaining gains? What must local union leaders do to help their laid-off members, protect those still working, and prevent the gutting of their hard-fought contracts – and their very unions themselves? How, in fact, can local union leaders seize the time and turn crisis into opportunity?
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