Happy National Retirement Security Week! The National Association of Government Defined Contribution Administrators started National Retirement Security Week in 2006 to recognize the importance of a secure retirement, and it’s been observed during the third week of October each year since.
This year, during the coronavirus-induced economic crisis, it’s more important than ever to protect the right to a secure retirement for all. Here are three ways you can fight for every American to retire with dignity during National Retirement Security Week (and beyond).
1. Acknowledge that the United States is facing a retirement security crisis.
Pensions have been around in one form or another for more than half of America’s history. Historically, they have provided a reliable source of income for retirees, who do not have to risk outliving their savings or losing them during a market downturn. Even private- sector employers recognized that they could provide a secure retirement. For example, as recently as 1980, almost half of all private-sector employees in America had an employer-sponsored pension plan.
Now, however, the state of retirement security in our country has changed. This change began in 1978 when Congress passed the Revenue Act, which created the modern-day defined-contribution plan known as the 401(k). Major corporations took advantage of this law to save money off of their taxes by switching their employees from a defined-benefit pension plan to a 401(k)-style defined-contribution plan.
These plans were never intended to be the main source of retirement income for workers, and their widespread adoption has been disastrous. 57 percent of Americans have nothing at all saved for retirement, and the median 401(k) balance in Fidelity Investments’ accounts nationwide is a paltry $24,500. This amount is hardly enough for one to afford the everyday expenses of retirement like healthcare, housing, groceries, and transportation. It’s no wonder that 75 percent of workers say there is a retirement security crisis facing our country.
Thankfully, however, most public employees still have access to a defined-benefit pension plan. But special interest groups want to dismantle this vital safety net for our country’s dedicated public servants. There are several ways you can defend their right to a secure retirement, however, including by…
2. Becoming an advocate for public pensions.
There is no formal application process in becoming a pension advocate – you just have to care about the role they play in a secure retirement for public employees.
The first step in becoming an activist is to research your state legislature because they make big decisions about public pensions, such as managing a state’s pension funding.
This week is a great time to find answers to the following questions:
- When does your legislature convene next year, and when do they adjourn?
- Who represents you in the state capital?
- What actions have they taken in the past about the public pensions in your state?
Keep in mind that, with the 2020 election in less than two weeks, there will likely be some turnover in your state legislature. Before it convenes, do one more check on who your lawmakers are, and make sure they know how you feel if there are any pension-related bills that are introduced. When lawmakers hear from advocates like you, it can make a difference in how they vote on a particular bill.
You can also become an advocate by spreading the message that every public employee deserves a secure and dignified retirement. Share our posts on Facebook and Twitter, and talk about why retirement security matters to you with your loved ones, friends, and co-workers on your next Zoom call or socially distanced gathering.
3. Combat misinformation from pension opponents.
Last but certainly not least, state and local governments are facing an enormous amount of fiscal pressure. The coronavirus-induced recession has slammed personal income and sales taxes, leading to drops in overall revenue for most states. Pension opponents have already used the economic slowdown to falsely claim that pensions should be cut to shore up a state’s funding.
You can combat this misinformation by sharing accurate information from reputable, nonpartisan sources on public pensions. These sources state that public pensions actually make up little of a state’s overall budget and that they benefit taxpayers.
According to the National Association of State Retirement Administrators (NASRA), less than five percent of all state and local government spending was spent on public pensions in the fiscal year 2017. Furthermore, pension plans are primarily funded through investment earnings, not taxpayer contributions, as NASRA has also found that investment earnings have accounted for 63 percent of all public pension revenue since 1989.
Public pensions are also a benefit for taxpayers and state and local governments. According to the National Institute on Retirement Security (NIRS), expenditures stemming from pension benefits supported $202.6 billion in federal, state, and local tax revenue in 2016. This makes pension benefits a valuable source of tax revenue for state and local governments who may be experiencing dips in revenue due to the recession.
Sharing these resources is how you can push back against this false narrative, which is vital for giving lawmakers and the general public an accurate, unbiased view on pensions.
We hope that during this week (and beyond), you’ll join us in the fight for every American to retire with dignity and security.
(P.S. Want to help now? Share our post with a loved one!)