Welcome to this week’s edition of This Week in Pensions! This is the news you need to know in the fight for a secure retirement.
Before you dive into our top stories from this week, check out some stories of public employees helping their communities during the coronavirus pandemic.
Here are the top stories from this week:
For Mother’s Day, Forget The Flowers And Get Retirement Security For Moms by Dan Doonan. This past Sunday was Mother’s Day. To mark the occasion, the Executive Director of the National Institute on Retirement Security (NIRS) wrote an op-ed for Forbes about the importance of guaranteeing women’s retirement security. Doonan notes that the current economic downturn has disproportionately impacted women as “more than 2.3 million women have left the workforce since February 2020, with female workforce participation dropping to 57%, the lowest level since 1988.” As a result, the retirement wealth gap will likely widen between men and women, which was already a problem before the pandemic began since “older women receive about 80% of the retirement income older men receive.” Doonan’s piece is another reminder of why pensions are so essential for female public employees, as they have been proven to help close the women’s retirement gap.
In Reversal, Retirements Increased During the Pandemic by Jed Kolko. In an article for the New York Times, Kolko covers why more Americans are retiring during the coronavirus pandemic. According to the Current Population Survey, in the 12 months from March 2020 through March 2021, “17% of Americans aged 55 to 64 were retired, up from 16.8% in the two previous years.” One major reason why so many Americans have retired over the past year, Kolko states, is because of the pandemic-induced recession. Workers aged 55 and older had to contend with one of the highest unemployment rates during the economic crisis. The catastrophic job losses forced many older workers to retire earlier than they had anticipated, which can cause them to save less for retirement than if they had retired later. One way lawmakers can protect older public employees when they retire is by maintaining their defined-benefit pension plans, which provide the secure retirement they deserve after serving the public as educators, nurses, firefighters, municipal workers, and more, all of which were even more critical for the functioning of society over the past year.
What you need to know about the US retirement crisis by Deb Hipp. Hipp shares several startling facts for MSN which reveal the challenges workers face in preparing for retirement. According to a 2019 study from Northwestern Mutual, many Americans do not have a high amount of retirement savings, as “nearly 1 in 5 (17%) Baby Boomers have less than $5,000 in retirement savings and 20% have less than $5,000 in personal savings.” Another issue is that many workers also do not have widespread access to employer-sponsored retirement plans. NIRS has found that “49% of private-sector workers had no access to such a plan in 2014,” significantly impacting their ability to save for retirement. One bright spot that does exist, however, is that most public employees will still have access to a defined-benefit pension. In 2018, according to the U.S. Bureau of Labor Statistics, 86% of state and local public employees had access to a defined-benefit pension, which helps ensure they can retire with security and dignity.
Be sure to check back next week for the latest news in the fight for a secure retirement!