Welcome to this 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, make sure you check out stories of public employees helping their communities.
Here are our top stories:
America’s racial wealth gap is enormous and getting worse by Rodney A. Brooks. This Fast Company piece investigates how the COVID-19 pandemic has exacerbated America’s already considerable racial wealth gap. Black Americans possess only 4% of the country’s wealth, despite representing 13% of the population. Factors that contribute to this are systemic and include student debt and the racial wage gap. Retirement savings for white Americans also dwarfs that of Black Americans, with the average white American family having more than $130,000 in liquid retirement savings (cash in 401(k)s, 403(b)s and IRAs) compared to the average Black American family’s $19,000. While the systemic factors contributing to this inequity cannot be erased or changed overnight, for Black households that would otherwise face serious obstacles to saving for retirement, pensions earned through public service are a reliable path to retirement security.
Jaw-Dropping Stats About the State of Retirement in America by Jordan Rosenfeld. Rosenfeld runs through the current numbers for America’s retirement landscape in this article for Yahoo! Finance, and the results aren’t pretty. The average retirement age is now 66, a full six years later than the 1990s average. Among the things that can complicate a secure retirement for Americans are having to access their retirement funds early, not having enough saved, and having to retire earlier and fund a longer retirement than expected. Further complicating matters is that 33% of American workers don’t have any real retirement savings plan.
State pensions finish 2021 with 25% gain, beat a key sustainability threshold for first time since financial crisis by Andrea Riquier. For the first time since the Great Recession, state pension systems have finished the 2021 fiscal year with funding levels over 84%. One difference that leads to this result is that while politicians usually will use an economic downturn as an excuse to lower pension contributions, this was not the case with the COVID-19 economic crisis. Because legislators stayed the course and kept up with their contributions (just as public employees do with every paycheck), the outlook for state pension systems is the best it’s been in over a decade.
Be sure to check back next week for the latest news in the fight for a secure retirement!