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“This anxiety comes at a time when the once stable retirement infrastructure has degraded dramatically, resulting in a national retirement crisis for middle-class Americans. Pensions for private sector workers continue to disappear under a complex regulatory environment. Social Security benefits have been cut, and Congress is said to be eyeing additional benefit reductions.” – Diane Oakley

 

Diane Oakley

Despite their political differences and loyalties, Americans remain united when it comes to one key concern: the provision of adequate retirement income.
That’s the conclusion of a study by the National Institute on Retirement Security (NIRS), authored by Diane Oakley and Kelly Kenneally. The report, Retirement Security 2017: A Road Map for Policy Makers, finds that Americans, “despite deep political polarization,” are anxious about their retirement prospects and dissatisfied with legislators’ inaction on the file.
“This anxiety comes at a time when the once stable retirement infrastructure has degraded dramatically, resulting in a national retirement crisis for middle-class Americans. Pensions for private sector workers continue to disappear under a complex regulatory environment. Social Security benefits have been cut, and Congress is said to be eyeing additional benefit reductions,” state the authors.
“A large portion of Americans lack access to, or do not participate in, workplace retirement plans. Additionally, Americans are not saving enough in their individual retirement accounts at a time when retirement income needs are increasing thanks to rising longevity and costs.”
Oakley, executive director of the institute, and Kenneally, communications advisor, produced the fifth nationwide public opinion project to discover public attitudes on retirement security, as well as views on policies that could bolster retirement security. They found that 76 per cent of Americans fret over their ability to have a secure retirement, a number that crosses political preferences.
The authors also found that about 88 per cent of respondents agree a retirement crisis is at hand, up slightly from 86 per cent in the previous iteration of the survey.
“The level of concern is high across gender, income, age and party affiliation. Importantly, more than half (55 per cent) strongly agree that there is a crisis,” they write.
When it come to preference of model, about 82 per cent of Americans view traditional pensions favourably.
“A full 85 per cent say all workers should have access to a pension plan so they can be independent and self-reliant in retirement. More than three-fourths of Americans (77 per cent) say the disappearance of pensions has made it harder to achieve the American Dream.”
A majority say pensions are better than DC-type savings schemes in helping people achieve retirement security.
While overwhelmingly favouring defined benefit pensions as a means of achieving retirement security, Americans, say the authors, don’t believe policymakers are listening.
“An overwhelming majority of Americans (85 per cent) say leaders in Washington do not understand how hard it is to prepare for retirement … similarly, 86 per cent say leaders in Washington need to give a higher priority to ensuring that Americans have a secure retirement,” say Oakley and Kenneally.
When it comes to solutions, the survey found that 82 per cent of respondents “say government should make it easier for employers to offer pensions.
That includes in Kentucky where state legislators are pondering a move to a DC-type plan for ‘non-hazardous’ public employees, including teachers. Research by the NIRS shows deep support for pensions among Kentuckians, with 92 per cent of respondents agreeing that pensions are effective at recruiting and retaining skilled employees.
“Americans also believe that state-sponsored retirement savings plans for workers not covered by an employer’s plan are a good idea (75 per cent), and 81 per cent say they would consider participating in a state plan.”
Americans’ economic anxiety “has reached a new high,” they continue, with 30 per cent worried about losing their job, up from 10 per cent. Household economic risks have increased over the past 30 years, and “wages and salaries have become more volatile, unemployment cycles have increased, stock prices have experienced wider boom and bust cycles, housing costs have seen swings, and household debt has increased.”
It’s enough to keep households awake at night, worrying if they can secure a comfortable retirement. The report reveals how deep is the anxiety, with 76 per cent of Americans acknowledging that economic conditions “are impacting their ability to achieve a secure retirement.”
Further, 76 per cent of respondents say it’s a mistake to reduce Social Security benefits for current and future retirees.
Additional studies like this one from the Canadian Public Pension Leadership Council (CPPLC) and another from the NIRS show the costs associated with a move from DB to DC; the latter is a case study of three states – Alaska, Michigan and West Virginia – that made the switch, and the study finds a misconception exists that DC plans save money compared to traditional pensions. West Virginia eventually moved new hires back to a DB plan.
“Americans strongly support pensions for police officers and firefighters (90 per cent) and for teachers (81 per cent). The research also  finds that Americans overwhelmingly support retirement security for workers who face job risks, such as corrections officers (90 per cent),” the authors say.
“More than half of Americans (52 per cent) believe that public pension benefits levels are about right at $2,205 per month, while 37 per cent say the benefits are too low. Americans overwhelmingly agree (92 per cent) that pensions are a good way to recruit and retain public sector workers like teachers, police officers and firefighters.”

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