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In Our View: Insecure About Future

Many workers lack pension plans; state lawmakers’ retirement options wise

The Columbian
Published: June 6, 2016, 6:03am

The declining middle class in the United States is a popular talking point these days and is a pressing issue in the current presidential campaign. But while the state of middle Americans presents immediate concerns, it also will have a large impact upon the future of the country.

That is one of the conclusions that can be gleaned from a recent report by Pew Charitable Trusts. Examining 104 metropolitan areas, the study found a wide disparity in access to retirement plans across the country. As more and more companies have abandoned defined pension plans, many Americans have seen a reduction in their financial security.

The caustic view would be to consider this to be simply a bad break for employees who do not have the skills or the wherewithal to seek more lucrative employment. But the fact is that the situation will impact all Americans in the future. As the Pittsburgh Post-Gazette wrote editorially: “Lower rates of retirement security portend more reliance on government aid programs. That means we all pay for income — and pension — inequality.” Or, as the Associated Press wrote: “It’s an issue of growing importance on a local level as governments consider how they can help out. Not doing so could mean facing a population unable to take care of itself in the future, which could put undue strain on programs like Medicaid, food assistant programs and other services.”

For many workers, the traditional pension has largely been replaced by 401(k) plans that include contributions from both employees and employers. But the Pew research found that 40 percent of full-time workers have access to neither form of retirement savings. It also found that access varies by location, ranging from 71 percent of workers in Grand Rapids, Mich., having a retirement plan to only 23 percent in McAllen, Texas. The Vancouver-Portland metro area ranked in the highest quartile of regions in the study, as did Seattle and Spokane.

Still, lawmakers in Washington were wise last year not to rest on the state’s laurels. The Legislature approved the creation of a marketplace in which small employers and the self-employed — people often left in the cold when it comes to long-term savings — can shop for retirement plans.

The lack of retirement security across the country also is reflected in a new study from Willis Towers Watson, a human resources consulting firm. That survey found that 23 percent of Americans who have jobs estimate they will still be working at the age of 70 — an increase of about one-sixth compared with a 2009 study.

The new survey also found that about 1 in 2 workers over 50 believe they will still be working at 70. But, as Forbes points out: “The workers expecting to keep plugging away until 70, the study discovered, are often ‘the most vulnerable’ and ‘showing higher levels of stress, lower levels of health and lower levels of engagement with their current jobs,’ says Shane Bartling, senior consultant at Willis Towers Watson.”

In other words, those who plan to continue working beyond the traditional retirement age often are those who might not be able to maintain jobs that long. The gist, according to the Forbes headline, is a “Coming Train Wreck for Older Workers.”

Americans long have labored under the impression that a lifetime of long and honest work will result in a secure present for their families and a secure future for themselves. Maintaining that reality must become a priority for policymakers.

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