In a recent article on Foxbusiness.com, it was reported that the U.S. has fallen three notches in the global retirement rankings. Although disappointing it cannot come as a surprise to anyone in our retirement industry. For a country as rich as ours, we are doing very little for the majority of our workers.
The issue isn’t just the demise of the traditional DB pension plan leaving very few with access to these important retirement vehicles, but it is compounded by the fact that most employees working in small companies (those with fewer than 50 employees) don’t have any access to an employer-sponsored plan. Furthermore, we have done an incredibly poor job of providing financial literacy in our public schools. Given this fact, why would we think that there would be a positive outcome from the migration of workers from DB plans to DC plans when the burden to manage this effort falls on the individual?
The article highlights the fact that we are living longer, which places a greater burden on our employees to save more, but for the average worker, incomes haven’t kept pace with inflation during the last two decades. Furthermore, although the “average” American may be living slightly longer, we recently reported on the fact that life expectancy has actually declined for those in the 45-55-year-old cohort that don’t possess more than a high school degree.
You want to improve outcomes? Let’s start by creating an educational system that does a more effective job of giving students the skills to meet the needs of tomorrow’s employers – not yesterday’s! Furthermore, let’s start investing in job growth and improved wages so that the average American can actually set aside some money for a potential retirement. There is a certain level of income necessary just to live, let alone to save for retirement. Many Americans (most?) aren’t there today! Shameful!