Last Thursday thousands of retirees took to the streets in protest, calling on the government to raise pensions and defend the Social Security system. This action occurred in Spain, but it could easily have unfolded in the U.S., as private pensions are transformed from defined benefit schemes to defined contribution plans, while Social Security adjustments continue to be contemplated, and in some cases, implemented.
The pensioners marched in the capital Madrid as well as Barcelona, Bilbao, Seville, and Granada. The union-organized rallies called for “dignified” pensions, saying that the government’s 0.25% increase failed to keep up with inflation – sound familiar?
Given reports of inadequate retirement savings for the median American household, it isn’t out of the realm that we will witness similar demonstrations across America’s cities, as the U.S. workers struggle to live on meager account balances and inadequate Social Security benefits.
Sure, remaining in the workforce for a longer period will mitigate some of the financial shortfalls, but as we’ve witnessed, most older Americans don’t have control over that decision. Furthermore, we already have nearly 95 million age-eligible workers out of the labor force for a variety of reasons, making it nearly impossible for many of them to make further contributions into a retirement savings vehicle.
The social and economic ramifications will be profoundly negative as a result of our failure to adequately prepare our workers for a “dignified” retirement. We are quickly running out of time to deal with this unfolding crisis.