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.
Here are the top stories from this week:
Getting Old Is a Crisis More and More Americans Can’t Afford by Michelle Cottle. In this in-depth piece for the New York Times, Cottle examines the affordability crisis impacting older Americans. “Nearly half of U.S. households headed by someone 55 or older have no retirement savings,” Cottle writes. This widespread lack of retirement savings will have particularly dire consequences for those who will need to afford long-term care, as “the median cost of a semiprivate room in a nursing home is more than $93,000 a year.” This article is another example of why pensions have several advantages over defined-contribution accounts like 401(k)s in providing retirement security. Because pensions collectively pool risk and are specifically designed to be invested over a long period of time, they are less susceptible to market downturns that can threaten one’s savings in a 401(k). Their ability to provide a modest, guaranteed benefit as recipients age means workers do not have to fear outliving their retirement savings.
Retirement: Gender financial gap is worsening amid savings imbalance by Stephanie Asymkos. According to Asymkos’ article in Yahoo! Money, the coronavirus pandemic and its ensuing economic crisis have harmed women’s ability to save for retirement. In the past year, “the average woman’s retirement savings dropped from 70 cents for every $1 saved by men to 68 cents,” she notes. One contributing factor to the lower retirement savings is that “caregiving responsibilities often fall on women,” making them more likely to temporarily or permanently leave the labor force. In turn, these breaks translate into “lost earned wages and potential employer retirement contributions.” Pensions are another critical tool that can ensure female public employees retire with security, as they are proven to help close the women’s retirement gap.
Be sure to check back next week for the latest news in the fight for a secure retirement!